Donald Trump’s Return: A Game-Changer or Grey Rhino for Global Markets?
Donald Trump’s return to the White House introduces significant uncertainty to global markets, with many bracing for potential ripple effects. While Trump touts unpredictability as a strategic advantage, certain personal traits remain consistent and may serve as indicators for future policies.
Former Morgan Stanley economist Stephen Roach noted after a post-election trip across major Asian cities an “almost smug optimism” among leaders who believed Trump’s tariff threats were “opening gambits in a predictable bargaining strategy.”
Trump’s business acumen often drives his approach. Threats, for him, serve as leverage. “He already demonstrated this in the first round of the trade war,” explained Nobunaka Chai, a senior semiconductor industry analyst at the Institute of Political Economy and Industrial Research at Cloud Express, a media outlet affiliated with Taiwan’s Legislature. “Trump threatened Section 301 tariffs on a broad list of Chinese goods but excluded key items after securing China’s commitment to buy more U.S. farm products.”
Tariffs as Negotiation Tools
Trump has floated sweeping tariffs, such as a 60% tariff on Chinese goods and 10-20% on all other imports, raising questions about feasibility. Howard Lutnick, Trump’s incoming Secretary of Commerce, reportedly advocates for a more strategic approach—aligning U.S. tariffs with those of other countries to force trade negotiations.
While new tariffs could disrupt trade and stoke inflation, UBS CIO Mark Haefele suggests their scope might be tempered by negotiations or legal challenges. Tax cuts and deregulation could also offset some market turbulence, fostering a more favorable environment.
Simon Evenett, Professor of Geopolitics and Strategy at IMD Business School, believes the impact of tariffs, though challenging, is not insurmountable for exporters like Germany. “The key is whether German firms can maintain—rather than boost—their trend in export growth. The faster German exports grow to non-U.S. markets, the smaller the overall impact of tariff disruptions. This underscores the importance of competitiveness,” he explained.
The “Grey Rhino” Effect on Trade
Trump’s policies amplify what some describe as a “grey rhino” effect—predictable but often ignored risks. With China’s economy and consumer demand weakening, U.S.-China tensions could further restrict high-tech exports such as semiconductor equipment and AI chips to China.
Other nations, however, can also deploy protectionist measures as a counterstrike to Trump’s policy. For instance, Indonesia banned Apple iPhones for failing to meet its requirement that smartphones sold domestically include 40% locally made components.
Yet, some sectors are thriving in the de-globalization era. EVA Air, for example, has reported strong growth in Southeast Asia, driven by high demand for both cargo and passenger services between Southeast Asia and North America. “Our premium cargo clients hail from Thailand, Vietnam, the Philippines, and Malaysia,” noted EVA Air President Chia-Ming Sun.
Winners Amidst Overhaul
Industries plagued by Chinese overcompetition may find relief under Trump’s tariffs. Silicon carbide (SiC) wafer producer Wolfspeed has faced plunging prices, forcing it to cut capital expenditures and reduce its workforce by 20%. “Even with $750 million in U.S. government grants and an additional $750 million in CHIPS Act loans, Wolfspeed’s cash burn rate could deplete resources within a year,” cautioned senior semiconductor analyst Andrew Lu.
Conversely, TSMC remains an indispensable player in AI chip manufacturing. Despite campaign rhetoric, no company rivaling Nvidia’s dominance can bypass TSMC’s foundry and packaging expertise. Gartner projects that by 2026, over 80% of enterprises will deploy generative AI-enabled applications, reliant on chips produced by TSMC, Samsung, or Intel. However, Intel faces financial struggles, and Samsung has paused production lines due to low yields, making TSMC the clear leader.
Currency exchange rates are expected to become even more volatile post-election. Taiwan’s Central Bank Governor, Yang Chin-long, likened the impact of hot money on economies like Taiwan to “a whale swimming in and out of shallow ponds.” With Taiwan’s annual international trade revenue approaching $800 billion, foreign exchange losses account for an estimated 3–5% of total revenue each year. Companies in countries with smaller, more vulnerable currencies increasingly turn to solutions that mitigate these losses. Peter Jeng, a global business partner at Ebury, the digital banking subsidiary of Santander Bank, noted that their services are in high demand as businesses brace for the potential fallout from Trump’s trade policies.
TSMC’s Role in U.S. Semiconductor Strength
The U.S. Department of Commerce’s recent allocation of $6.6 billion in CHIPS Act grants to TSMC underscores its pivotal role. The funding includes plans for advanced A16 chip production at its Arizona facility by 2026. Industry insiders note that TSMC’s Arizona site was initially planned to house six fabs, demonstrating its commitment to U.S. semiconductor development.
“Entering this phase of the U.S. CHIPS and Science Act marks a pivotal step in strengthening the semiconductor ecosystem,” said TSMC Chairman and CEO Dr. C.C. Wei. “This collaboration accelerates the development of the most advanced semiconductor technology in the U.S.”
Chai highlighted the Arizona fab’s rapid progress, with 4nm chip yields surpassing its Taiwan counterpart's. Chai suggested that speculations about the US forcing the relocation of TSMC R&D teams to Arizona may be unnecessary. “Arizona’s engineers are catching up fast. It’s not inconceivable that TSMC’s Arizona site could someday surpass Taiwan in R&D if TSMC also sets up an R&D center there.”
Ultimately, TSMC's unparalleled competitiveness as the sole foundry capable of producing the most advanced chips has shielded it from potential geopolitical fallout. Without this edge, the company could have been significantly impacted by the geopolitical pressures tied to Trump's policies. This highlights a crucial lesson for industries worldwide: strategic investments are vital, but sustaining technological leadership and operational excellence is what ensures long-term resilience and dominance in global markets.
Navigating the Crossroads of Global Trade
As Trump’s potential return reshapes the trade landscape, industries and governments must prepare for both disruption and opportunity. While protectionist policies and heightened geopolitical tensions pose significant challenges, they also underscore the importance of adaptability and resilience.
For industries like semiconductors, which are critical to technological advancement, leaders such as TSMC demonstrate how strategic investments and collaboration can mitigate risks and maintain growth. Meanwhile, exporters in sectors ranging from aviation to advanced materials are finding ways to capitalize on shifting global dynamics.
Trump’s approach may bring volatility, but it also offers a reminder: those prepared to pivot and innovate will ultimately determine their success in an evolving global order.