A recent topic has sparked lively discussion in the market—what kind of impact Trump’s tariff threats in his policies will have on investment markets. I went over what happened from last year through the beginning of this year, and I think it’s worth taking a deeper look.

After taking office, Trump quickly pushed forward his trade policies, especially on tariffs. In the late period of last year, during his campaign, he repeatedly emphasized that he would impose a general tariff of 10%-20% on all imported goods, and that for Chinese goods in particular, he would add a special tariff as high as 60%. After assuming office, he did follow through on what he said, and he began announcing the measures one after another starting early this year.

In particular, his tariff policies can be broadly divided into two categories. One is short-term, negotiation-based—in essence, it is used as leverage for domestic policy, such as imposing a 25% tariff on Canada and Mexico to address the problem of fentanyl inflows. The other is long-term tariffs, which are the true core of his trade policy, aimed at addressing trade imbalances and promoting a return of manufacturing.

In terms of implementation approach, there are also three types: global tariffs, tariffs targeting specific countries, and tariffs targeting specific industries. Global tariffs are intended to raise the U.S.’s low tariff rates to the global average level. Country-specific tariffs target rivals such as China, Canada, and Japan. Industry-specific tariffs focus on strategic industries such as steel, chips, and pharmaceuticals.

The real force of this set of Trump policies began to show itself in early this year. After announcing tariffs on Canada, Mexico, and China, the market reaction was intense. North American supply chains tightened up, especially in the automotive industry: frequent cross-border movement of parts caused costs to surge, and the price of a car could rise by as much as $3,000.

Inflation expectations were also pushed higher. Imports of goods from Canada, Mexico, and China account for nearly half of the United States’ total imports, and a 25% tariff directly lifts the prices of agricultural products, energy, and timber. Experts predict that U.S. personal consumption expenditures inflation could rise from 2.3% to 2.6%-3.0%, which limits the Federal Reserve’s room to cut interest rates. When consumers expect prices to rise, they may reduce spending.

Global markets also fell into uncertainty. The Canadian dollar and the peso depreciated by 8% and nearly 12%, respectively, and China eased pressure through renminbi depreciation. Although these currency fluctuations may temporarily reduce the tariff burden for exporting countries, they increase the relative price of U.S. export goods. Retaliatory tariffs (for example, China imposing an additional 10%-15% tariff on U.S. agricultural products) further expose U.S. exporters to the risk of losing market share.

In the stock market, the automotive industry was hit first. Traditional automakers such as General Motors and Ford were affected the most because they rely heavily on supply chains in Mexico and Canada. Analysts estimate that for each 10% increase in Mexico tariffs, General Motors’ earnings per share could fall by 20%. Stocks related to electric vehicles and companies involved in charging infrastructure also came under pressure as supply chain costs rose.

Companies with significant exposure to the China market also became a focus. The stocks of companies that are highly dependent on the China market were hit first. Chip manufacturers became tariff targets due to global supply chain networks—NVIDIA, Broadcom, Qualcomm, and others were all in the spotlight. Industrial manufacturers such as Deere, Caterpillar, and Boeing, which have broad global footprints, have historically seen significant swings during tariff disputes in their first-term years, and the situation may repeat itself. The solar industry also saw risks rise sharply due to China’s dominance in the supply chain.

In the foreign exchange market, the dollar’s reaction to tariff-related news has been somewhat positive, but it has recently started to shift. As the market re-evaluates the negative impact of Trump’s policies on the U.S. economy, the dollar’s traditional safe-haven status is being questioned, and sentiment is moving from bullish to bearish. Trump’s tariff policies have normalized geopolitical risk into the FX market, causing trade policy to replace economic data as the main driver of short-term exchange-rate fluctuations.

In commodities, gold and silver prices surged on strong safe-haven demand. Oil and industrial metals such as steel and aluminum saw increased volatility, and copper futures briefly spread panic sentiment. Oil trading has continued to be volatile, affected by multiple factors including OPEC production increases, geopolitical factors, and repeated changes in tariffs.

For Taiwanese investors, Taiwan’s exports to the United States account for about 15% of GDP. If companies such as TSMC face potential tariffs, higher costs would squeeze profits, putting downward pressure on the Taiwan stock market. The New Taiwan dollar has also experienced sharp swings driven by foreign investors’ demand for risk aversion. As the global trade war heats up, it raises inflation and market uncertainty; import costs for Taiwan increase, which may dampen consumer-related stocks. While Taiwanese manufacturers accelerating supply chain shifts to Southeast Asia or the U.S. is a long-term positive, higher costs in the short term are unfavorable for investor confidence.

In the short term, Trump’s policies are expected to bring in about $110 billion in fiscal revenue, supporting tax-cut plans. However, Bloomberg Economics shows that the total volume of U.S. imports may decrease by 15%, GDP may fall by 0.4%-1.3%, and there is also a risk of losing job opportunities. Supply chain restructuring may ease some pressure, but it takes time and involves costs, making it difficult to offset losses in the near term.

Given these uncertainties, investors should carefully review their own portfolios and appropriately diversify to spread risk. In addition to semiconductor stocks, consider allocating to other areas such as biotech and green energy, or invest in different regions such as Europe and emerging markets, to reduce the impact of volatility in any single market. At the same time, closely monitor the trade policy developments between the United States and Taiwan, as well as the Taiwan government’s corporate support measures. The Taiwan government has already pledged to help companies move production lines to the United States to ease tariff pressure.

Given that U.S. tariff policies may weigh on the Taiwan dollar, investors may consider increasing the proportion of U.S. dollar-denominated assets—for example, dollar time deposits or U.S. bonds—to hedge risks arising from exchange-rate fluctuations. Trump’s policies are still evolving: the current measures are only the beginning. Future adjustments may be made based on economic effects and international bargaining, which requires investors to remain vigilant and be ready to adjust their strategies at any time.