Semiconductor analyst Malcolm Penn has raised concerns about the short-term effects of suggested high tariffs on imported chips by U.S. President-elect Donald Trump, stressing their potential to impact consumer prices and industry profitability.
Trump has criticized the CHIPS and Science Act that the U.S. government signed into law in 2022 in a bid to revive the country's sci-tech and chip sectors by offering incentives to chipmakers and forcing them to take side. He suggested high tariffs on imported chips, instead of relying on federal incentives for domestic production of semiconductors.
In an interview with China Global Television Network (CGTN), Penn highlighted the stark contrast between federal incentives and proposed tariffs on imported chips.
"I think the thing about the CHIPS Act is it was designed to encourage manufacturers to build factories back in the United States, and that takes a long time. So you can understand why Mr. Trump doesn't like that because it will be the next president that gets the benefit of that, rather than him. Whereas tariffs are an instant effect and that will put the price up of everybody's imported components. And that would then have an immediate impact on the cost of everything that we buy and has electronics in it. And those effect take immediate effect because nobody keeps on inventory anymore. So the fact is that you put the tariff, it would be instantly happen and the prices would rise straight away," he said.
Penn highlighted the critical role of semiconductors in the cost structure of various goods, particularly in the automotive sector. He noted that a 200-percent tariff on semiconductor imports, as proposed by Trump, would triple their price, driving up car manufacturing costs by 10 to 20 percent.
"I think that the semiconductor is anything from around 10 percent to 30, 40 percent of the cost of a car, depending on whether it's conventional gasoline driven car or an EV (Electric Vehicle) car. And so it is a big part of the overall cost. Now the actual chip value in that, there is probably half that amount. But anyway, that's still a big amount. So if you suddenly add 200 percent of the cost of the chip and effectively makes the chip three times the price that it currently is, that would affect the cost of manufacture by a minimum of 10 percent, probably could be as high as 20 percent," Penn said.
Trump-proposed tariffs on chip imports to impact industry profitability: analyst
Electric two-wheeler exports from Wuxi City in east China's Jiangsu Province have surged in recent years, as local manufacturers expand into overseas markets with Chinese-made innovations.
In the first three quarters of this year, exports of electric motorcycles and bicycles from Wuxi increased by over 30 percent year on year, more than twice the city's overall export growth rate.
The Wuxi (Xishan) Electric Vehicle Industrial Park has seen a steady influx of international buyers, drawn by the affordability, quality, and advanced technology of Chinese electric vehicles. A 30-member delegation from Hungary visited to explore expanded procurement opportunities, while British buyers traveled to Wuxi to source products for new retail ventures.
"It's good for the environment as well. So it's an in all the best solution," said Hungarian buyer Daniel.
"Very nice, very high-quality, I think. I think they'll be very popular," said British buyer Royde.
A leading company in Wuxi prominently displayed a wall filled with numerous patent licenses in its exhibition hall, showcasing over 2,400 national patents registered by the organization.
"We have dozens of core components, all of which utilize our patented inventions. We have also invested in some cutting-edge technologies and prepared core patents in advance," said Li Shuai, deputy director of the technology research and development center, Chinese electric vehicle manufacturer TAILG Group.
Backed by core technologies, Wuxi manufacturers are steadily rolling out high-tech, practical new products to meet global demand.
The local business bureau is actively assisting companies venturing overseas by addressing various related issues, including channel connections, cross-border e-commerce advancements, and funding applications. Additionally, a WeChat group has been established, encompassing over 50 key export enterprises, which ensures that their demands are responded to within 24 hours.
"[If we] encounter any issues, [we] can consult him directly. He has a dedicated platform to help us resolve these problems, including inquiries related to the China Export and Credit Insurance Corporation (Sinosure) and various laws and regulations. This support is extremely beneficial for our company," said Yang Jiang, general manager of Jiangsu Zhongxing Motorcycle Co., Ltd.
To help companies expand their reach, Wuxi has organized more than 20 domestic and international exhibitions this year, connecting electric vehicle makers with overseas buyers. Firms from Xishan frequently travel abroad in groups to showcase their products and strengthen brand visibility. Meanwhile, the local government also offers financial support to companies that establish marketing networks and direct sales outlets overseas.
So far, Wuxi's electric vehicle companies have opened more than 2,000 sales stores in over 40 countries, with annual exports exceeding one million units.
"In response to the demand from overseas markets, we are making relevant technological upgrades to create a positive cycle, driven by both new national and international standards," said Cheng Zhe, deputy district head of Xishan District.
Wuxi sees export boom in electric two-wheelers amid rising global interest
