As Trade Wars Heat Up Over Trump's Tariffs, Is Taiwan Semiconductor Stock Still a Buy Before April 17?

Adam Spatacco, The Motley Fool

Wed, Apr 16, 2025, 5:41 AM 5 min read

Generally speaking, stock prices move based on reactions to quarterly earnings or economic indicators such as inflation or unemployment rates. At the moment, those variables have taken a back seat to another gigantic topic: swaying investor sentiment.

Of course, I'm referencing President Trump's tariff policies. With earnings season quickly approaching, investors are surely going to be dialing in to earnings calls to hear what corporate executives have to say about how tariffs are impacting their businesses.

Let's explore how the narrative around Trump's tariffs have already impacted the stock market -- and in particular, the technology sector. From there, I'll hone in on semiconductor stocks and explore if Taiwan Semiconductor Manufacturing (NYSE: TSM) looks like a good buy right now as the company's earnings come into focus on April 17.

President Trump announced his new tariff agenda on April 2, calling the high-profile event "Liberation Day." Since then, the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) have each fallen by more than 10% at the lowest levels. In addition, megacap growth stocks in the technology sector have been feeling quite a bit of pressure.

At the moment, the allure of artificial intelligence (AI) isn't enough to entice wary investors. As the chart illustrates, the Roundhill Magnificent Seven ETF, which tracks the movements of "Magnificent Seven" stocks Nvidia, Microsoft, Apple, Tesla, Meta Platforms, Alphabet, and Amazon, is down about 5% since April 2.

While this analysis sheds light on how the tariff narrative is impacting leading technology stocks, it doesn't do much to help us understand how Trump's new policies are affecting the semiconductor industry.

The reason I am focused on semiconductors is twofold. First, chips play an integral role in the development of generative AI. In addition, chip companies such as Nvidia, Advanced Micro Devices, and many more outsource much of their manufacturing to Taiwan Semiconductor.

These tariffs have already sparked quite a bit of tension among international trade partners with the U.S. Given that many American technology companies rely on the sophisticated fabrication services from Taiwan Semi, ongoing negotiations around what specific goods are subject to tariffs could take a toll on near-term business prospects.

As the graph indicates, chip stocks haven't fared so well over the last couple of weeks. Among the stocks I've outlined, TSMC is the second-worst performing stock in this peer set, with a drop of 8.5% since April 2.