In a recent interview on The Joe Rogan Experience, former President Donald Trump reignited a contentious debate by claiming that Taiwan had “stolen” America’s semiconductor industry.

Trump’s remarks echo previous accusations he’s made, asserting that Taiwan has taken control of a technology crucial to the US economy.

However, experts argue that Taiwan’s dominance in semiconductor manufacturing isn’t the result of theft but rather an innovative business model and decades of investment.

As the 2024 US presidential race intensifies, the focus on Taiwan’s semiconductor industry—led by Taiwan Semiconductor Manufacturing Company (TSMC)—raises questions about what Trump’s potential return to office could mean for the global chip sector.

Trump’s perspective: tariffs and ‘protection fees’

Trump’s comments reflect his concerns about American reliance on Taiwan’s semiconductor output.

During the interview, he criticized the CHIPS Act, suggesting that US funds should not be used to benefit foreign firms setting up plants domestically.

If re-elected, Trump proposed enacting tariffs on Taiwanese chips, specifically those from TSMC, which manufactures chips for tech giants like Apple and Nvidia.

He even suggested that Taiwan should pay the US for its defense, a notion Taiwan’s officials dismissed as an unwelcome “protection fee,” according to CNN.

TSMC shares dropped by 4.3% in response, highlighting market sensitivities to geopolitical tensions.

Taiwan’s semiconductor success

Experts counter Trump’s accusations, emphasizing that Taiwan’s semiconductor industry emerged through foresight and strategic planning rather than “stealing” American technology.

TSMC, established by Morris Chang in 1987, pioneered a “pure-play foundry” model.

Instead of designing its chips, TSMC focused exclusively on manufacturing for other companies—a novel approach at the time.

This allowed TSMC to scale production, attract clients across sectors, and become a linchpin in the global semiconductor supply chain.

“TSMC’s success stems from a focus on manufacturing excellence and economies of scale, not from taking anything from the US,” Christopher Miller, author of Chip War: The Fight for the World’s Most Critical Technology, was quoted as saying by CNN.

This manufacturing-focused approach, paired with Taiwan’s ecosystem of skilled engineers, has made it the world’s leading supplier of advanced chips, producing over 90% of global output, according to the Semiconductor Industry Association.

Attempts by Intel and Samsung to replicate TSMC’s foundry model underscore how Taiwan’s semiconductor rise was organic, not opportunistic.

Why US companies depend on TSMC

Despite Trump’s criticism, US technology giants like Amazon, Microsoft, and Google deeply rely on TSMC’s advanced manufacturing.

The threat of a potential conflict between China and Taiwan has heightened US interest in reducing this dependency, leading to initiatives like the CHIPS Act, signed by President Joe Biden in 2022, aimed at boosting US chip production.

However, building a domestic semiconductor manufacturing base is no simple task; Intel and other companies face high costs, labor shortages, and regulatory challenges in the US, highlighting the complexities of Trump’s push to bring chip manufacturing home.

For TSMC, expanding into the US also presents challenges.

The company is constructing three Arizona facilities but has encountered delays tied to differences in work culture and labor regulations.

“TSMC must adapt its operations to fit the local culture and labor systems if it truly wants to become a global company,” said former TSMC R&D director Konrad Young, per CNN.

US-Taiwan chip dilemma

If Trump were to impose tariffs on Taiwanese semiconductors, it could complicate supply chains and raise costs across the tech sector.

Citi analysts noted that tariffs would involve extensive audits, given the complex composition of chips in electronic devices.

History suggests that a trade dispute could prompt retaliation from China, as seen when Beijing restricted American chipmaker Micron’s access to the Chinese market during earlier tensions.

On the other hand, a Trump presidency could favor American chip manufacturers like Intel and Texas Instruments, potentially reshaping the industry’s competitive landscape.

As the US grapples with securing its chip supply, Taiwan’s role remains indispensable.

Trump’s comments underscore the challenges of reducing dependence on foreign chipmakers while balancing geopolitical considerations.

Meanwhile, TSMC’s influence in the global tech landscape continues to grow.

However, as Konrad Young suggests, the key to any successful expansion will lie in cooperation rather than competition, fostering an environment where both US and Taiwanese firms can thrive for a sustainable semiconductor future.

In the broader debate, Taiwan’s path to semiconductor dominance illustrates a strategic model that rivals seek to emulate rather than replace.

While Trump’s claims make headlines, industry experts agree: Taiwan didn’t steal America’s chip industry—it built one that has become the envy of the world.

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With the US presidential election mere days away, manufacturers brace for potential policy shifts that could reshape the industry’s trajectory for years.

While they’re on track for one of their best years, many firms remain cautious about the unknowns, particularly around trade policies under potential Trump tariffs.

A Democratic win, on the other hand, might maintain the status quo.

For now, industrial stocks in the Russell 1000, excluding Boeing, are up by about 22% in 2024, closely mirroring the S&P 500’s rise.

They trade for about 25 times estimated 2025 earnings, a premium to the market’s 21 times multiple. 

“Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy…and election uncertainty,” said Timothy Fiore, chairman of the Institute for Supply Management’s (ISM) PMI survey in their October report, as reported by Barron’s.

AI and aerospace demand expected to hold steady

Manufacturers this year have benefitted from substantial spending on electrification and artificial intelligence infrastructure.

As major tech companies pour billions into AI data centers, demand for equipment has surged, and so needs airplane parts and new jets, propelling growth for aerospace suppliers.

Despite broader industrial sluggishness, the AI and aerospace demand are expected to hold steady into 2025.

However, Boeing has had a rocky year. Its stock has dropped by around 41% year-to-date, in contrast with broader industry gains, as production and quality issues persist, coupled with a strike by its machinist union.

While demand remains high, the company faces its own set of hurdles, including added regulatory scrutiny and production constraints.

Potential tariff changes could spark trade war

Should Donald Trump win the election, his plans for tariff increases could present new challenges.

His strategy to bring more manufacturing back to the US through tariffs may seem beneficial on the surface.

However, increased tariffs often spark retaliation, and a new trade war could impact some of America’s biggest manufacturers, particularly in the aerospace industry.

China, for instance, is a major customer of Boeing, with around 200 Boeing 737 jets operated by China Southern Airlines.

But Beijing might halt future Boeing orders if fresh tariffs hit US-China relations.

Tariffs levied against European manufacturers too could impact Boeing which does not make planes in Europe.

Airbus, which manufactures jets in Mobile, Alabama, could benefit due to its US-based operations, giving it a potential edge in such a scenario.

Suppliers like GE Aerospace, who serve both Airbus and Boeing, may be less affected directly by the tariffs, though they too wish to avoid disruptions tied to Boeing’s production and geopolitical uncertainties.

Reshoring brings jobs, but industrial momentum remains weak

Efforts to boost US manufacturing through tariffs and government policies have delivered results over the past few years.

Since Trump’s first term, employment in the sector has risen as companies ramped up domestic production of semiconductors, batteries, and automobiles.

US manufacturing employment grew from 12.4 million workers at the end of 2016 to 12.9 million by September 2024, marking consistent growth through both the Trump and Biden administrations.

But reshoring alone hasn’t solved the sector’s bigger challenges.

This limitation is reflected in the performance of major players like Rockwell Automation and Honeywell which have trailed the S&P 500 in performance over the past two years, with average returns of only 8%.

Additionally, the ISM’s monthly PMI index, which indicates manufacturing growth, has been above 50 only once in the past two years, highlighting a deep industrial weakness.

Lower interest rates to be a short-term tailwind

The election may resolve some uncertainties, but manufacturers remain cautious.

However, one tailwind could come in the form of lower interest rates expected in 2025, which are likely to help boost capital expenditure and order momentum across the industry.

“Order momentum is expected to accelerate in late 2024 and into 2025 following the US election and interest rate cuts given historically elevated capacity utilization rates across durable goods manufacturing,” wrote Jefferies analyst Saree Boroditsky in a recent report.

As manufacturers prepare for a new year, they’re hopeful for policy stability and continued support from interest rate cuts.

But all eyes are on the election results, knowing they could either propel or hinder growth depending on the outcome.

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Gold prices rose on Tuesday ahead of the US Presidential election on November 5 and a string of key economic data releases later this week.

Prices have come close to their record high earlier in the session as the traders shrug off easing geopolitical tensions in the Middle East. 

At the time of writing, the most active gold contract on COMEX was at $2,766.50 per ounce, up 0.4% from the previous close. Earlier in October, gold prices had touched a record high of $2,772.60 per ounce.  

Gold prices had come under pressure on Monday as Israel’s attack on Iran over the weekend had limited impact as it did not target any oil and nuclear sites. 

However, safe-haven demand for the yellow metal remains intact ahead of the US elections next week. The uncertainty over the outcome, which will determine US politics over the next four years, kept traders on their toes. 

Election jitters

The uncertainty surrounding the elections next week could determine the movement in gold prices. 

Most polls have been showing that former US President Donald Trump is leading Vice President Kamala Harris. However, analysts believe that the contest would be closely fought. 

Fxstreet.com said in a report:

Persistent safe-haven demand stemming from Middle East tensions and US election jitters continue to act as a tailwind for the precious metal. 

In case of a Trump win, concerns about a trade war with China would increase safe-haven demand for gold. Moreover, Trump could also ease sanctions on Russia, while doubling them on Iran. 

Economic data in focus

Traders are also focusing on the release of the third quarter GDP data from the US on Thursday.

Additionally, the Personal Consumption Expenditure (PCE) index, the US Federal Reserve’s preferred gauge, will be released on Friday, along with the non-farm payroll data. 

All these data are scheduled to be released before next week’s Fed policy meeting. If the data showed further cooling of the economy, it would bode well for more interest rate cuts in the US. 

Lower interest rates increase demand for non-yielding metals such as gold and silver. 

According to the CME FedWatch tool, traders expect 95% probability of the US Fed cutting interest rates by 25 basis points at its November meeting. 

At its September meeting, the Fed had cut rates by 50 bps, surprising the market. 

The technical outlook for gold

Gold prices have resistance around $2,770-$2,775 per ounce level, according to experts. 

If prices breach the $2,775 per ounce level, the yellow metal could move up to $2,800 per ounce next. Gold prices on COMEX have risen more than 30% since the start of this year. 

“That said, the Relative Strength Index (RSI) on the daily chart is on the verge of breaking into the overbought territory and warrants some caution for bulls,” Haresh Menghani, editor at Fxstreet, said in a report. 

Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for any further near-term appreciating move.

Copper prices fall

Among industrial metals, copper prices on the London Metal Exchange fell on Tuesday as traders await more cues from top consumer, China. 

The recent stimulus packages announced in China were not enough to generate demand for the red metal. Traders have been expecting the Chinese government to announce economic stimulus to prop up the property sector. 

Traders will now focus on the purchasing managers index from China due on Thursday for more cues. 

At the time of writing, the three-month copper contract on LME was at $9,522 per ton, down 0.2% from the previous close. 

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It is hard to be optimistic about France’s financial situation lately.

Last week, Moody’s downgraded France’s credit outlook from “stable” to “negative,” a move that also supports earlier concerns from Fitch. 

With debt projected to hit 115% of GDP by next year and an annual deficit expected to reach 6.1%, France now holds one of the most precarious financial positions in Europe. 

The downgrade raises significant questions about France’s ability to manage its finances and the future stability of the European economy as a whole.

A snapshot of France’s financial troubles

France’s fiscal deterioration has drawn significant criticism from international agencies, each warning of heightened risks for one of Europe’s largest economies. 

Moody’s cited France’s ballooning debt and deficit, as well as an unpredictable political climate, as primary reasons for the downgrade.

The country’s government debt has surged to 112% of GDP, spurred by extensive spending during recent economic crises like COVID-19 and the subsequent inflation spike.

Prime Minister Michel Barnier has proposed an austerity budget to rein in spending and raise taxes on the wealthy, aiming to generate €60 billion in savings next year alone. 

Yet, even this ambitious plan has struggled to gain traction, facing resistance from both ends of the political spectrum.

The downgrade is a warning shot that has sent borrowing costs for France to near-decade highs.

Yields on French bonds have spiked, signaling that international investors are demanding a higher risk premium. 

This is especially significant for France, whose borrowing rates affect not just the domestic economy but also set a tone across European markets.

Macron and Barnier: a divided leadership

A fundamental disagreement between President Emmanuel Macron and Prime Minister Michel Barnier further complicates France’s fiscal path. 

Macron, wary of austerity’s impact on growth, opposes drastic budget cuts and tax increases.

He argues that economic growth, fueled by reforms he implemented during his tenure, will eventually stabilize France’s finances.

Macron’s approach, dubbed “Macronomics,” relies on growth to solve budget issues—a strategy that is increasingly hard to sell to investors and rating agencies amid surging debt and deficits.

In contrast, Barnier sees France’s deficit as an urgent issue that cannot be ignored. His proposed budget, with steep spending cuts and new taxes, reflects his belief that only immediate action can prevent further fiscal decline.

However, the lack of consensus within the government has delayed critical reforms, leaving Barnier’s plan vulnerable to political stalemates that threaten France’s fiscal credibility.

Markets dislike divided leadership

France’s fractured political landscape only adds to investor uncertainty. 

Since Macron called snap elections over the summer, his party has lost its former majority, leaving Barnier’s austerity budget mired in opposition.

Left-wing factions have added amendments for additional taxes, while right-wing factions push for even deeper cuts.

Barnier’s proposal has already sparked heated debates, with some far-left lawmakers pushing a new 2% wealth tax on billionaires, which critics say could deter investment.

The lack of a cohesive fiscal policy has had a measurable impact on France’s credibility in financial markets.

Rating agencies have noted that France’s political divisions make it unlikely to implement sustained deficit reduction measures. 

In an environment where many EU countries are tightening budgets, France’s political situation is a unique liability, signaling weak budget management and fiscal discipline at a time when confidence is crucial.

Europe’s fiscal rules under pressure

France’s financial troubles are a direct challenge to European Union fiscal rules, which cap debt at 60% of GDP and deficits at 3%. 

France’s debt has surged well beyond these limits, now standing at around 112% of GDP.

The European Commission has even raised the possibility of sanctions if France continues to flout these rules. 

However, enforcing such penalties on the EU’s second-largest economy would be a delicate and politically charged decision.

The situation highlights a longstanding dilemma: How can Europe enforce fiscal discipline without destabilizing one of its cornerstone economies?

This financial strain also raises questions about the effectiveness of the EU’s fiscal criteria, as France is not alone in its budget struggles. 

Countries across Europe are grappling with rising debt amid high interest rates and slowing economies, and the effectiveness of EU fiscal policy is under scrutiny.

If one of Europe’s largest economies cannot meet the rules, this could prompt broader reform discussions, potentially reshaping how the EU approaches debt and deficit policies.

What does France’s future look like?

France’s “negative” outlook may imply higher yields, but it also signals vulnerability in one of the EU’s key economies.

Investors are becoming more cautious about France’s debt, reflected in the rising yields of French bonds compared to more stable economies like Germany. 

If ratings agencies continue to lose faith in France’s fiscal management, borrowing costs could climb even further, increasing the strain on government finances.

The downgrade also raises broader questions about how sustainable growth-based fiscal strategies like “Macronomics” really are. Macron’s growth-first approach faces scrutiny as France’s debt and deficit continue to balloon. 

With no majority in parliament, Macron’s team has limited room to maneuver on budget matters, making significant economic reforms even harder to implement.

Broader message for Europe

France’s fiscal struggles carry implications well beyond its borders. 

The European Union relies on its largest economies, particularly Germany and France, to set an example of fiscal stability.

With Germany managing a disciplined budget and now France’s finances under severe scrutiny, there is a new emphasis on financial accountability within the bloc. 

The fiscal path France takes will serve as a key indicator of how the EU enforces fiscal compliance among member states, especially in a high-stakes environment where rising debt and inflation strain government budgets across the continent.

Moody’s downgrade is more than just a setback for France; it’s a message to Europe’s policymakers about the consequences of unchecked debt. 

As EU economies face slowing growth and rising costs, the expectations for fiscal discipline are shifting, and France’s experience may become a cautionary tale for others.

With the looming possibility of more rating downgrades, France’s financial path forward will be a crucial test of the EU’s fiscal resolve and, potentially, a turning point for its policies.

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ByteDance founder Zhang Yiming has been crowned China’s wealthiest person, according to the Hurun Research Institute, displacing Nongfu Spring’s Zhong Shanshan, who led for the last three years.

Zhang’s $49.3 billion fortune eclipses Zhong’s wealth of $47.9 billion, following a tumultuous year for Zhong’s bottled water business, which faced public criticism in early 2024.

Zhang, known globally for TikTok, saw his wealth surge as ByteDance’s profits rose by nearly 30%, positioning him at the top of China’s wealth hierarchy.

This year’s rankings highlight the evolving landscape of Chinese wealth, with tech and energy sectors now leading, a shift from the once-dominant real estate sector.

Tech billionaires dominate China’s wealthiest

The rise of ByteDance founder Zhang Yiming marks a significant shift in China’s wealth composition, with tech billionaires increasingly topping the list.

Tencent CEO Pony Ma, valued at $44.4 billion, ranks third, and Colin Huang, Pinduoduo’s founder, comes fourth.

Tencent and Pinduoduo’s international expansion and revenue growth have fortified their founders’ standings.

ByteDance’s global success with TikTok exemplifies the trend of Chinese entrepreneurs targeting international markets, a strategy that now distinguishes new-generation billionaires from their predecessors.

China’s billionaire population has dropped significantly, with 142 fewer billionaires compared to the previous year, bringing the total to 753.

This 16% decline follows challenges in the Chinese economy and underperformance in the stock markets.

The billionaire count has fallen by more than 30% since its peak of 1,185 in 2021, underlining China’s economic slowdown and market volatility.

The combined wealth of China’s wealthiest individuals reached $3 trillion, marking a 10% decrease from last year.

Focus shifts from real estate to tech and energy

The Hurun China Rich List reflects a shift in Chinese wealth from real estate to technology, consumer electronics, and renewable energy sectors.

With former wealth leaders in real estate slipping, entrepreneurs in tech and energy now represent the country’s economic future.

Executives from firms like ByteDance and Pinduoduo showcase this shift, leveraging international markets to expand their wealth.

The list’s composition is a telling indicator of where China’s economic growth is anticipated in the coming years, with fewer developers but more innovators in digital and green sectors.

Hurun Research notes that today’s Chinese billionaires are markedly more global-minded.

Zhang Yiming’s ByteDance and Colin Huang’s Pinduoduo have notably ventured beyond China, with TikTok and Temu respectively gaining significant international traction.

This strategic focus on foreign markets aligns with broader economic goals as China’s domestic market growth moderates, driving entrepreneurs to seek opportunities abroad and secure their fortunes through global outreach.

The Hurun China Rich List indicates that technology and energy are now key wealth generators in China, reshaping the country’s economic landscape.

Pony Ma of Tencent and Zhang Yiming of ByteDance exemplify this transition, building fortunes through high-growth, digitally-centered ventures.

The shift from real estate to technology underscores a transformative moment for China’s economy, spotlighting innovation and internationalization as critical factors for wealth accumulation.

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