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Comment by Tadpole9181 | Hacker News Reader

Someone talk me down here, genuinely.

Combine this with the other tariffs, killing green manufacturing and the chips act and infrastructure bills, threatening our allies, a freeze on all federal grants and loans (a couple hours ago, if you aren't keeping up), etc... how does this not result in a total collapse of the US economy?

Tech is a significant portion of our market. How could destroying our ability to source the most advanced hardware and driving a wedge in between a critical ally who literally cannot concede for their national security possibly lead to anything but a lack of trust or confidence in the US, increased costs, and a shrinking market for US tech?

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> how does this not result in a total collapse of the US economy?

In the long term, it does. It's crazy to read a history of tariffs and conclude that raising tariffs on everyone, everthing and everywhere doesn't hurt you. But in the short term, that demand must be sated, and that disruption creates opportunities.

> How could destroying our ability to source the most advanced hardware

It won't. Taiwan depends on us. They'll cave and we'll get a short-term win. What it also does is create a strategic imperative for Taiwan to balance its dependence on America. Those chickens, unfortunately, won't come home to roost for years.

> In the long term, it does. It's crazy to read a history of tariffs and conclude that raising tariffs on everyone, everthing and everywhere doesn't hurt you. But in the short term, that demand must be sated, and that disruption creates opportunities.

Actually its the opposite. In the long term it incentivizes manufacturing chips in the US. Domestic manufacturing has bipartisan support (see Biden's CHIPS bill) and obvious nation security implications. That's not to say tariffs are the right solution but the end goal is good and uncontroversial.

It creates economic chaos in the short term because the supply of domestic chips is relatively low and the cost of foreign chips will increase dramatically. This will normalize over time as domestic production ramps up.

How quickly do you think that manufacturers could set up American fab plants? Domestic chip production on the level of TSMC is several years out even if all available resources were directed toward it now.

You are aware that Intel has fabs, right?

They're not particularly behind TSMC. The issue is one of costs - TSMC is cheaper. If Trump hits them with tariffs, suddenly it's no longer cheaper than fabbing with Intel.

Whether Intel has the capacity is another story.

Intel's fabs aren't competitive, period. They might compete when 18A gets taped out, but that's been in development hell for years now and is struggling to leave the sampling stage. TSMC has a track record of profitable EULV yields and can even charge competitors for fab access. I say that as an Intel apologist.

If Trump's goal is to make imported chips unprofitable, then he's going to push America backwards. Even Intel doesn't use Intel's fabs for high performance or high efficiency designs at this point.

> Intel's fabs aren't competitive, period.

If there's a 100% tariff on Taiwan made products, I assure you, Intel will be deemed competitive. Apple isn't going to double their BOM cost just to eke out another 10-20% in performance.

Apple is one of the only companies in modern existence that could take a 2x hit to their SOC price and still turn an enormous profit on their hardware alone. There are non-Intel options Apple might consider like the TSMC Arizona plant, but Apple would only pick Intel as a fab partner over Tim Cook's dead body.

Don't forget that Apple's leadership is basically glued to Trump's hip for this administration. They'll be getting closer to the 25% rate for sure, and that's absolutely feasible with the margins Apple makes.

Even if Apple can weather the cost increase, most others cannot. Apple constitutes only 25% of TSMC's revenue.

> This will normalize over time as domestic production ramps up.

The problem is that it takes 5 years from the time ground is broken to the time an advanced fab is producing chips. In the meantime you decimate domestic industries that were dependent on these Taiwanese chips.

Part of this might be bluffing or just for show, so we don't know if Trump will follow through on these tariffs. Though the uncertainty alone this introduces could have serious effects as companies might avoid investments that Trump could blow up at any moment.

The grant freezes are just outright insane, how bad this will get depends on how long they last. The slight silver lining is that this order might just be so extreme that it'll fail and be overturned. This is not a carefully planned attack on the impoundment control act but they just flipped the table entirely.

Your best chance is that Trump might listen to the billionaire buddies that would lose money here instead of those that just want to see the government burn.

It does

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