US Semiconductor Tariffs Threaten Asia Supply Chains, Malaysia Risks Largest Growth Impact

President Donald Trump's tariff policies are significantly impacting global semiconductor and automotive industries, with notable economic risks and strategic shifts in manufacturing. Malaysia faces the steepest growth risk in Asia from impending U.S. semiconductor tariffs under Section 232, potentially reducing its GDP growth by 0.5 percentage points, amid ongoing uncertainty over tariff exemptions. Taiwan's semiconductor sector, crucial to the U.S. supply chain, is navigating the 100% tariff by investing heavily in U.S. manufacturing facilities, exemplified by TSMC's $165 billion expansion, reflecting a broader trend toward nearshoring and reshoring to mitigate tariff impacts. U.S. regional manufacturers report mixed effects from tariffs, with production declines but cautiously optimistic future outlooks, while profit margins show varied trends. Meanwhile, Japan and the U.S. are working to resolve differences over reciprocal tariffs, with expected reductions in auto tariffs from 27.5% to 15%, though the timing remains uncertain, creating challenges for Japanese automakers like Toyota, Mazda, Honda, and Subaru. The Japanese auto industry, a major export sector, continues to feel volatility and uncertainty due to Trump's tariff measures, affecting earnings projections and industry confidence.