Since 2025 began, one clear trend has defined the economic year and severely impacted many industries: the tariffs imposed against Canada, Mexico, and China.
President Donald Trump promised that if elected, he would waste no time implementing tariffs, and so far, he has delivered. However, his claims that tariffs would help spur economic growth have not panned, as consumer goods prices rise and prominent stock prices fall.
Part of the logic behind Trump’s decision to levy tariffs against many industries is that they will compel companies to either start or expand manufacturing facilities in the U.S., thereby providing more jobs for American workers.
However, not all experts are optimistic that Trump’s plan to restore U.S. manufacturing will be effective. One tech leader recently addressed it, highlighting a key flaw regarding one high-growth industry.
U.S. President Donald Trump’s tariff plans may not be as effective as he believes, according to one expert.Â
Trump’s tariff plan overlooks an important detail for tech companies
As the tariffs continue to push down financial markets, uncertainty is high, and many investors seem nervous. Over the past few months, even the most prominent tech stocks have struggled against these shifting economic tides, raising concerns about a looming bear market.
Trump touted a tariff victory earlier this year when Taiwan Semiconductor Manufacturing Company (TSM)  pledged to spend $100 billion building chipmaking foundries in the U.S. Given the company’s dominant status in the artificial intelligence (AI) chip market, this likely seemed like an initial win for the U.S. job market.
Related: Major tariff decision could severely impact a prominent chipmaker
According to one tech leader well-versed in chip building, though, Trump’s victory lap may have been premature. Pat Gelsinger, the former CEO of Intel (INTC)  turned venture capitalist, recently discussed what he sees as a likely flaw in the U.S. tariff strategy.
As Gelsinger sees it, simply adding manufacturing to the U.S. won’t actually revive the nation’s chipmaking industry, as Trump seems intent on doing. In his view, that would require companies not just setting up stateside factories but also conducting the actual innovative research and development (R&D) that drives the industry.
“If you don’t have R&D in the US, you will not have semiconductor leadership in the US,” he stated. “All of the R&D work of TSMC is in Taiwan, and they haven’t made any announcements to move that.”
Based on further reports, that isn’t likely to change in the near future. The Trump administration has leaned heavily on TSMC in recent months but the company’s leaders seem unfazed.
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According to the Financial Times, “TSMC has said that the only development work it plans to carry out in the US will be on the process technology it already has in production and that its core research and development will remain in Taiwan,” confirming its only interest is in manufacturing chips in the U.S.
Will tariffs ever help revitalize U.S. manufacturing?
As TheStreet reported earlier this month, Trump has made it clear he is focused on helping the U.S. dominate the AI chip manufacturing market. However, Gelsinger’s statements raise an important question on that front that seems to be largely overlooked: will simply building more chips in the U.S. be enough?
Related: Experts sound the alarm on dangerous plan to save Intel
Gelsinger isn’t the only expert to speculate that Trump’s plan may not be as effective as he believes. Commentator Fareed Zakaria recently published an editorial in which he argued that the “great American manufacturing comeback” touted by Trump and Vice President JD Vance is not realistic, as the world’s most advanced economies are dominated by services, not manufacturing.
“The effort to revive manufacturing via protectionism is an effort to defy basic economics. In a free market, people and countries are forced to specialize, moving to those things they can do best,” he noted.
Despite these looming problems, Gelsinger also believes that the U.S. has a “global edge in many advanced technologies.” However, without the true innovation that comes from actual research and development, the U.S. economy risks remaining stagnant, even if companies like TSMC temporarily bring manufacturing jobs back to the U.S.Â
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