Donald Trump’s Economic Policies: The Impacts on TSMC, Taiwan’s Economy, and the ICDF/Official Development Assistance

David Pendery

Donald Trump’s wide-ranging tariffs on allies and enemies alike, and what looks like an all-out attack on international development organizations and “official development assistance” (ODA), has not a few people on edge with uncertainty. According to Sumit Kumar, in the Taipei Times (“Trump 2.0 implications for Taiwan,” March 22), Trump has embarked on “destabilizing foreign policy initiatives” that have threatened Taiwan with economic reservations, and “suspended US aid programs” that are important in Taiwan politics and culture. As Kumar notes, “One country that has all the more reason to observe Trump’s foreign and security policies closely is Taiwan.”

No less than Taiwan is in Trump’s sights, and he has announced plans to impose tariffs on Taiwan-made chips in an attempt to “incentivize” corporations to relocate to the United States. Such an “incentive” appears to be the tariffs in the technology fields of up to 100%. Trump has claimed that Taiwan “stole” the US’s chip business, a claim that few technology professionals, much less ordinary consumers, would agree with. All of this is a self-seeking and opportunistic approach that would no doubt have a harmful effect on Taiwan, and would send shockwaves through global supply chains. Trump’s tariffs and attempted deconstruction of the Taiwan chip industry may also have an impact in terms of security, as the semiconductor industry in Taiwan has been said to work as a “silicon shield” to keep it protected from Chinese attack.

Trump’s tariffs, according to the Organization for Economic Co-operation and Development, appear to be slowing economic growth in the United States and around the world while driving prices higher, creating a toxic brew for the global economy that could grow even worse if tensions escalate. And so much the worse for Taiwan.

In terms of the Trump administration’s extreme attack on international development organizations—principally in our view the attack on the United States Agency for International Development (USAID) and its ODA—the assessment looks to be difficult going ahead in Taiwan. President Trump has made significant reductions to this U.S. agency charged with delivering humanitarian assistance overseas and this move strikes home in Taiwan.

Since the 1950s, Taiwan has received a great deal of ODA from the U.S., originally from the International Cooperation Administration, a predecessor to USAID, which has worked closely with Taiwan’s major international development agency, the International Cooperation and Development Fund (ICDF) (as a note, this author worked as an English Consultant with ICDF from 2001–2002). ICDF has worked in various guises since the late 1950s (it was officially established in 1995) in areas of technical cooperation, humanitarian assistance, lending and investment, and international education and training, in order to improve socio-economic development, enhance human resources and promote economic relations in a range of developing countries (almost all of whom have been official allies of the Republic of China/Taiwan). ICDF has cooperated not least with USAID, hosting training on “Health Workforce Management and Data Systems: A Focus on Pacific Island Countries and Health System Resilience,” and also working with COVID-19 patients with non-communicable diseases. A Memorandum of Understanding (MOU) signed by the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States on November 3, 2022, named USAID and ICDF as AIT and TECRO’s designated representatives.

Under a related arrangement between AIT and TECRO, USAID and ICDF coordinated with Paraguay’s Ministry of Industry and Commerce to strengthen micro, small, and medium-sized enterprises and promote development in Paraguay. In another AIT–TECRO arrangement, USAID and ICDF worked together to enhance climate and disaster resilience in the Pacific region. ICDF contributed up to US$600,000 to a U.S.–Taiwan partnership under USAID’s Pacific American Fund, supporting civil organizations across the Indo-Pacific to promote locally designed and led development solutions that increased resilience and improved the livelihoods of Pacific Island communities.

Given all of the above, it can be seen that Trump’s USAID moves will have a serious impact on Taiwan’s international work through the ICDF. In a word, ICDF and Taiwan are looking at “the destruction of USAID by US President Donald Trump and the DOGE, led by Musk, with trepidation” (James Baron in the Taipei Times, “Why Taiwan feels the USAID debacle more keenly than most,” March 19). The status of Taiwan’s current and future cooperation with American ODA organizations is “unclear,” and “this includes ongoing projects with the ICDF, Taiwan’s dedicated ODA agency.”

From a personal perspective, as a former employee of ICDF (though I have no connection to Taiwan’s technological business), I can reiterate that President Donald Trump’s “DOGE” and anti-ODA shenanigans are of no value to the nation and people of Taiwan, and outstanding institutions like ICDF (and TSMC), which have given so much good back to the international space.