Donald Trump's recent tariff policy raises investor worries: Startups face major challenges

Taiwan • Business • 04/22 19:02
Donald Trump's recent tariff policy raises investor worries: Startups face major challenges

Former U.S. President Trump, during his second term in office, pushed for a new round of tariff policies, imposing tariffs as high as 145% on Chinese goods and closing the duty-free loophole for small packages, putting pressure on the venture capital industry and startups. These policies disrupted the global supply chain, impacting fundraising, product pricing, and market expansion, undermining investment confidence, delaying plans for IPOs, and potentially causing some startups to close. Venture capital firms have adjusted their strategies by extending investment cycles and shifting to secondary market transactions, while some industries, such as AI and nearshore manufacturing, remain attractive.

Key Updates

04/23 07:06

Taiwan-U.S. trade talks focus on taxes on alcohol and goods: The U.S. is calling for transparency and fair competition in the system

After President Trump of the United States announced a 32% reciprocal tariff rate on Taiwan, trade negotiations between Taiwan and the U.S. have heated up, with alcohol taxes emerging as a central issue. The U.S. questions the differing tax standards for imported and local alcoholic beverages in Taiwan, calling for transparency and fair competition. Taiwan's Ministry of Finance provided import data to support the negotiations. Local netizens are skeptical about whether tax reductions will be reflected in consumer prices and are worried about potential monopolies by middlemen.

04/23 05:59

The American automotive industry opposes the 25% tariff on auto parts, highlighting the appeal of Chinese manufacturing as consumers shift to buying from China.

In April 2025, six major organizations in the U.S. automotive industry, including the Alliance for Automotive Innovation, jointly sent a letter to the Trump administration, requesting the repeal of the 25% tariff on auto parts that went into effect on May 3, warning that this move would severely damage the supply chain. Due to rising car prices, American consumers have initiated a "reverse purchasing" trend, traveling to China to purchase goods, highlighting the price and quality competitiveness of Chinese manufacturing. This situation reflects shifts in the global supply chain and consumer market.

04/23 01:59

Trump's Tariff Policy on China Causes Market Turmoil: Meta's Ad Revenue Expected to Decrease, Tesla's Stock Price Rises, IBM's Financial Report Draws Attention

On April 23, 2025, U.S. President Donald Trump imposed a 145% tariff on Chinese goods, leading to global market fluctuations. Meta is projecting a $7 billion decrease in revenue due to reduced advertising spending by Chinese retailers. Tesla CEO Elon Musk announced a reduction in his involvement with government efficiency matters, resulting in a 4% increase in Tesla's after-hours stock price. The White House received tariff agreement proposals from 18 countries and is in talks with 34 countries. IBM released its financial report, with market attention on the impacts of its AI initiatives and tariffs. Dow futures rose by 500 points on expectations of easing trade tensions, indicating a stabilization in investor sentiment.

04/22 22:31

The US and India accelerate trade negotiations, the Asian markets react to the dollar's depreciation, the Chinese funds adjust their asset allocations.

In April 2025, U.S. Vice President Vance visited India, and after meeting with Prime Minister Modi, the two sides made significant progress in trade negotiations, aiming to finalize a preliminary agreement before the fall to prevent India from facing a 26% tariff. The U.S. dollar index has depreciated by more than 9% since the start of the year, while the Korean won and Indonesian rupiah have also weakened, raising concerns in the market about capital outflows and potential U.S. retaliation. Chinese public mutual funds have decreased their holdings in U.S. stocks while increasing their investments in A-shares and Hong Kong stocks as part of a risk management strategy in response to uncertainties in U.S. policies.

04/22 20:59

American CEOs Addressing 2025's High Tariffs: Using Policy Loopholes to Cut Costs

In 2025, after the Trump administration returned to office, it reimposed high tariffs on imported goods. CEOs of American companies adopted various strategies to cope, including lobbying the government for exemptions and taking advantage of loopholes in foreign trade zones and gray market activities. These actions highlighted the ambiguities in policy implementation and demonstrated the companies' adaptability in response to the restructuring of global supply chains. Companies also influenced policy through political donations and considered nearshoring production and establishing factories directly in the U.S. to reduce the impact of tariffs.

04/22 19:02

Donald Trump's recent tariff policy raises investor worries: Startups face major challenges

Former U.S. President Trump, during his second term in office, pushed for a new round of tariff policies, imposing tariffs as high as 145% on Chinese goods and closing the duty-free loophole for small packages, putting pressure on the venture capital industry and startups. These policies disrupted the global supply chain, impacting fundraising, product pricing, and market expansion, undermining investment confidence, delaying plans for IPOs, and potentially causing some startups to close. Venture capital firms have adjusted their strategies by extending investment cycles and shifting to secondary market transactions, while some industries, such as AI and nearshore manufacturing, remain attractive.

04/22 18:32

*The Wall Street Journal* has criticized Trump's tariffs policy as the largest economic blunder in decades, shaking global market confidence.

In April 2025, The Wall Street Journal criticized former President Trump's tariff policy as the biggest economic blunder in decades, arguing that its instability has undermined global market confidence. Trump's attempts to meddle with the Federal Reserve and his trade war strategy have sparked a crisis of confidence in capital markets, jeopardizing U.S. financial stability. Japanese investors have engaged in a massive sell-off of U.S. bonds, indicating a significant loss of confidence among foreign investors. Experts warn that the tariffs could lead to stagflation in the U.S. economy and advise Trump to end the tariff offensive to stabilize the market.

04/22 17:29

Rising US-China Trade Tensions: Retail Experts Urge Consumers to Buy Smartphones Before Tariffs Increase

In April of 2025, the United States imposed tariffs as high as 145% on Chinese goods, while smartphones were temporarily exempted. Retail expert Louis Ramirez advised consumers to act quickly if they need to buy a phone before prices change. Due to supply chain pressures, Apple has increased its inventory, leading to a record high in iPhone shipments. If the exemption is removed, iPhone prices could increase by 17% to 18%, affecting market demand. Worried about price increases, consumers have begun purchasing early.

04/22 15:03

With the United States imposing a 20% tariff on Chinese laptops, leading brands are shifting to Southeast Asian supply chains, and as a result, shipments could decline by 2.1% in 2025.

The United States has imposed a 20% tariff on Chinese-made laptops, prompting global laptop brands to speed up moving their supply chains to Southeast Asia. However, if the U.S. imposes an additional 10% to 20% tariff on Southeast Asian laptops, market confidence might take a hit. According to a TrendForce report, if negotiations fall through, the annual growth rate of laptop shipments by brands in 2025 could plummet from 1.4% to -2.1%, highlighting how tariff policies affect the global supply chain and market demand.

04/22 07:05

Chinese Goods Redirected to Europe Raise Concerns: British Retailers Call for Abolishment of the Minimum Tax-Free Allowance to Combat Competition

After the United States imposed a 145% tariff increase on Chinese goods, Chinese exporters redirected their goods to Europe, raising concerns among European industries. British retailers have pointed out that these goods, competing at low prices through platforms like SHEIN and Temu, are putting pressure on the local retail sector. British industry leaders are urging the government to abolish the "minimum tax-free threshold" policy, following the U.S. example by ending the $800 tax-free threshold, to ensure a fair competitive environment.

Overview of Tariff Policy: From "Reciprocal Tariffs" to Broad Expansion

In early 2025, the Trump administration announced a series of tariff measures targeting China and other trade partners. According to public data, these measures include:

  • Imposing tariffs averaging up to 145% on Chinese goods;
  • A 25% tariff on all imported cars and parts;
  • Closing the "de minimis" exemption loophole, imposing a 30% uniform tariff on parcels under $800;
  • A 25% tariff on steel and aluminum products;
  • A 25% tariff on Canadian and Mexican goods that do not comply with USMCA standards.

The rapid implementation and broad scope of these policies, along with the lack of a transparent exemption application mechanism, make it difficult for businesses to predict future costs and supply chain risks.

Investor Anxiety: Capital Flow and IPO Market Obstruction

According to a report by WIRED, several venture capital partners have indicated that Trump's tariff policy has become a central topic in recent investment meetings. Tom Drummond, a partner at Heavybit, stated, "No one knows what will happen next." He noted that startups relying on cross-border trade, especially in hardware, clean tech, and biotech industries, will be the first to be affected.

PitchBook data shows that in the first quarter of 2025, the proportion of U.S. capital flowing into venture deals in Europe and China fell to 47%, a drop of four percentage points from the fourth quarter of 2024. This reflects international investors' concerns about the uncertainty of U.S. policy.

Additionally, EY statistics indicate that the number of U.S. IPOs in 2024 was 176, a significant increase from 2023 and 2022. However, a KPMG report noted that several startups, including Chime, StubHub, and Klarna, have postponed their listing plans in early 2025. Chip Hazard, a partner at Flybridge Capital, warned entrepreneurs in a letter: "If you are fundraising, complete the transaction as soon as possible."

Practical Challenges for Startups: Supply Chain, Capital, and Market Confidence

For startups, the challenges posed by tariff policies extend beyond rising costs. Many companies rely on components and manufacturing capabilities from China or Southeast Asia, and with increased tariffs, they must reassess their supply chain strategies. Drummond mentioned that one of his IoT platform companies is considering shifting suppliers to Vietnam.

Charles Hudson, a partner at Precursor Ventures, stated that several e-commerce startups he invested in might be "severely affected," but it is currently difficult to formulate response strategies because "the logic and timing of the tariffs seem to be known only to the president."

Furthermore, according to a survey by Small Business for America’s Future, 72% of small businesses reported that the volatility and uncertainty of tariff policies have caused a "whiplash effect" on their long-term planning, stalling capital expenditures and expansion plans.

Venture Capital Strategy Shift: Extending Investment Cycles and Shifting to Secondary Markets

Facing an unstable policy environment, venture capital firms are adjusting their investment strategies. Precursor plans to extend the investment cycle of its fifth fund from two years to three years to allow more time to observe market changes. Hudson predicts that in the next five years, the main exit strategy for venture capital funds will shift towards secondary market transactions rather than IPOs or mergers and acquisitions.

Drummond also noted that venture capitalists are becoming more cautious, and the past strategy of "holding on" to investments until IPO is no longer applicable, with a preference now for early share sales to ensure liquidity.

Certain Industries Remain Attractive: AI and Nearshoring Favored

Despite the overall market gloom, some investors remain optimistic about the potential of specific industries. AI, defense technology, and cybersecurity sectors, which naturally avoid Chinese supply chains, have become "safe havens." Startups related to logistics and nearshoring have also benefited from policy shifts.

Flybridge's Hazard stated that if AI companies can help clients improve operational efficiency and revenue, they will remain valuable during economic uncertainty. According to KPMG, the U.S. AI industry continues to attract the most global capital, with OpenAI and Anthropic raising over $43 billion in the first quarter of 2025.

Institutional Response to the Startup Fundraising Environment

In Taiwan, in response to changes in the international trade environment, the Legislative Yuan passed amendments to the "Industrial Innovation Act" in April 2025, relaxing the establishment years and investment thresholds for startups and increasing personal investment tax deductions. This move is seen as a "timely relief" under the pressure of U.S. reciprocal tariffs, helping to attract more capital into the startup industry.

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