Donald Trump's motivations for repealing the US CHIPS Act

In his joint speech to Congress on Tuesday, March 4, US President Donald Trump took aim at the 2022 CHIPS and Science Act and urged lawmakers to "get rid" of it. The Act was passed in order to provide billions of dollars in subsidies for the nation's semiconductor chip production and manufacturing.

"What a terrible, terrible thing your CHIPS Act is," Trump declared. We donate hundreds of billions of dollars, and it makes no difference. They don't spend the money they take from us. Mr. Speaker, you ought to repeal the CHIPS Act and use the money that remains to pay down debt.

Trump recently declared that Taiwan Semiconductor Manufacturing Co. (TSMC), a major player in the chip industry, would invest an additional $100 billion in the United States, building five new "cutting edge" manufacturing facilities.

First, what are semiconductors?

The silicon-based devices known as semiconductors, sometimes called microchips or integrated circuits, process information such as sounds, images, and radio waves by turning on and off millions or billions of transistors, which act as tiny electrical switches. Nearly every significant object in the modern world contains them, including toys, expensive luxury goods, cell phones, automobiles, home appliances, and cutting-edge defence systems.

According to economic historian Chris Miller's book Chip Wars, "We rarely think about chips, yet they've created the modern world," highlighting the importance of these tiny devices. The destiny of nations now depends on their capacity to use computing power. Globalization as we know it would not be conceivable without the commerce in semiconductors and the electronic products they facilitate.

The CHIPS Act: What is it?

After several decades of individual corporations outsourcing the technology, the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act was passed into law in August 2022 with the goal of relocating microchip manufacture to the United States.

The Act provided $53 billion in federal subsidies to promote domestic semiconductor manufacture and research and development. Of this, $39 billion was allocated to companies building new semiconductor manufacturing plants in the US. The measure also allows businesses to earn a 25 percent tax credit.

The CHIPS Act has already drawn criticism from President Trump. The president has criticized the bill, arguing that it is a waste of public funds and that tariffs would achieve the same objective while increasing government revenue, according to a Bloomberg article.

The Act has also been assailed by Republicans who wish to abolish its "social" components. The paper states that "that could involve eliminating labor-friendly regulations or environmental requirements."