How are South Korea, Japan, and Taiwan responding to the Trump administration’s proposed investment linked semiconductor tariffs—which could cover both imported chips and chip containing products—given Commerce Secretary Howard Lutnick’s warning that firms without U.S. factories

South Korea and Japan are pressing Washington to honor country-level “no less favorable” semiconductor treatment, while Taiwan is leaning on its U.S. trade-and-investment deal and TSMC’s large U.S. build-out. The problem is that Lutnick’s proposed approach appears to make relief depend on each company’s U.S. manufacturing commitment—not simply its home country’s agreement—so it could recast negotiated national protections as firm-by-firm permissions. 12

• Proposed policy: The administration is developing targeted semiconductor duties, potentially extending beyond stand-alone chips to chip-containing goods such as servers, laptops, and game consoles. Tariff relief could be tied to U.S. fab construction or to duty-free import quotas calculated from a company’s committed U.S. output; companies without U.S. production would pay tariffs. The tariff rate, covered products, quota formula, timing, and legal implementation remain unannounced. 134

• South Korea: Seoul is negotiating possible additional chip investment while invoking its bilateral assurance that Korean semiconductors will receive treatment “no less favorable” than competing countries’ products. Its concern is that Samsung and SK hynix could fare worse than TSMC if the benchmark becomes each firm’s U.S. capacity rather than Korea’s negotiated national status. 56

  • Samsung has announced more than $37 billion in planned investment for its Central Texas semiconductor ecosystem, supported by a prospective CHIPS award of up to $4.745 billion. 7
  • SK hynix has a U.S. advanced-packaging and AI-products investment plan, but neither Korean company had announced a new U.S. fab commitment during the current tariff push comparable to TSMC’s expanded fabrication build-out. 8
  • Separately, South Korea’s broader trade package included a $350 billion U.S. investment commitment, but that is not the same as a quantified, company-specific chip-fab threshold. 9

• Japan: Japan’s response is to point to its July 2025 strategic trade-and-investment framework—under which it committed up to $550 billion for strategic U.S. investment—and seek assurance that semiconductor measures preserve the deal’s agreed tariff treatment rather than add an uncapped, company-specific chip penalty. The framework reduced the general tariff on most Japanese imports to 15%; its application to future Section 232 semiconductor measures is the key unresolved issue. 1011

• Taiwan/TSMC: Taiwan has a semiconductor-focused U.S. trade deal that combines tariff concessions with commitments to invest in U.S. technology production. TSMC is the clearest fit for the administration’s proposed test: it has pledged total U.S. investment of up to $165 billion, including new Arizona fabs, advanced packaging, and R&D capacity. 212

• Why firm-specific exemptions are disruptive: A country-level promise such as Korea’s “no less favorable” treatment can still be honored formally while producing very different outcomes for Samsung, SK hynix, TSMC, and Japanese suppliers if each receives a different exemption or quota based on its own U.S. construction schedule, capacity, product mix, or investment size. That shifts leverage from treaty-level negotiations to discretionary company-level determinations—and risks reopening bargains in which countries offered broad investment, market-access, or procurement concessions for predictable tariff treatment. 5610

In short, the regional response is not outright rejection: Seoul is discussing additional investment, Tokyo is relying on its $550 billion framework, and Taipei/TSMC is presenting U.S. capacity expansion as compliance. But none has clarity yet on the actual tariff rate, which products qualify, whether embedded chips are covered, how an investment is credited, or whether a bilateral agreement guarantees an exemption rather than merely relative treatment. 134