Taiwan has announced it expects an exemption from the Trump administration’s 100% semiconductor tariff. This news has caused shares in Taiwan Semiconductor Manufacturing Company (TSMC) to rise. So far, no further details about the exemption have been shared. Meanwhile, the President of the Philippines Semiconductor Industry has voiced worries about how the full tariff will hurt the industry.

The Impact On Trade

The Philippines depend heavily on semiconductor exports, with 70% of its exports from this sector. If TSMC is exempt from the tariff, it may create an unfair advantage in the industry. As of August 7, 2025, we should anticipate significant fluctuations in the semiconductor market. The uncertainty surrounding “no further details” may impact options trading. The implied volatility on semiconductor stocks, especially in the SOXX ETF, has likely increased, indicating anticipated price swings. For those who believe the exemption will be granted, buying call options on TSMC (TSM) is a direct strategy. TSMC already holds over 60% of the global foundry market share as of early 2025. An official exemption would strengthen its position and likely boost the stock price. We could use a bull call spread to manage our risk. On the flip side, the wider semiconductor sector seems vulnerable. It may be wise to purchase put options on other Asian chipmakers or the SOXX ETF. With the Philippines calling the situation “devastating” and electronics making up over 60% of their exports in 2024, other regional producers that lack exemptions will likely face severe margin pressures.

Strategic Considerations

We should keep in mind the tariff changes from 2018 to 2020, when initial announcements were often reversed. This history suggests that the current optimism around TSMC might be too soon, making protective puts on TSM a sensible option against a possible policy reversal. A sudden shift could erase today’s gains just as quickly. A pairs trade may offer the best approach in the coming weeks. We can go long on TSMC while simultaneously going short on the SOXX ETF. This strategy focuses on the effects of the exemption, betting on TSMC to outperform its struggling competitors. Lastly, we need to consider the impact on U.S. tech companies. Companies like Apple and Nvidia, which are major TSMC customers, now face challenges with their other suppliers. Any disruption to the broader supply chain could raise their costs, making put options on these companies an interesting secondary strategy. Create your live VT Markets account and start trading now.

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