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

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.

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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.

Trump's tariff policies are rocking the stock market, and big tech is really feeling the pressure

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.

^SPX data by YCharts

Chip stocks have been particularly vulnerable

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.

SMH data by YCharts

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.

Image source: Taiwan Semiconductor Manufacturing.

Should you buy the dip in TSMC stock right now?

I can understand if the sell-off in the stock market right now is disorienting to investors. That said, there are a few things on my mind as a long-term investor.

Unlike other forms of legislation and regulatory affairs, tariff policies don't always need intermediary approvals from Congress. For this reason, tariffs can generally be imposed or reversed pretty quickly. This dynamic can be a positive or a negative, depending on the situation.

For example, the Trump administration could choose to impose very specific types of tariffs around certain aspects of semiconductor products or certain countries that manufacture and export them to the U.S. Given how fast these policies can change, it's natural for investors to become bogged down by all the uncertainty.

With that said, I see a silver lining hiding among all of this hoopla. According to the National Economic Council leadership, the Trump administration is currently in negotiations with 130 countries around the tariffs. I'm cautiously optimistic that these trade talks are a good signal for what's to come down the road.

Said another way, I see the tariffs as a bargaining chip to renegotiate trade relations. As such, the near-term uncertainty has caused widespread panic in the capital markets. However, the long-term results could be much more positive if the U.S. is able to hammer out some new trade deals.

While the day-to-day talks and negotiations will likely dominate news headlines, I wouldn't focus too much on that right now. Instead, I'd encourage investors to focus on the moves big tech is making.

So far this year, there have been a number of large-scale AI infrastructure projects announced, including over $300 billion from Microsoft, Meta, Amazon, and Alphabet, as well as a $500 billion commitment from Apple. Investment in AI doesn't appear to be going away, and I see ongoing spending from big tech as a catalyst for TSMC's services in the long-run.

While I suspect the markets will continue to witness volatility as the tariff situation unfolds in the near term, I think the current dip in Taiwan Semi stock is too good to pass up right now. Therefore, I would encourage investors to consider buying Taiwan Semi shares as earnings season fast approaches.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nebius Group, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.