US Treasury Chief Warns Taiwan Chip Dominance Poses ‘Greatest Threat’ to Global Economy

ISTANBUL, Jan 20: US Treasury Secretary Scott Bessent on Tuesday warned that Taiwan’s near-monopoly on advanced semiconductor production represents the single largest threat to the global economy, cautioning that any disruption could trigger catastrophic consequences.

“I would say that the single biggest threat to the world economy, the single biggest point of single failure, is that 97% of the high-end chips are made in Taiwan,” Bessent told the World Economic Forum in Davos, Switzerland. He described a potential blockade or destruction of Taiwan’s chip manufacturing as an “economic apocalypse,” highlighting Washington’s push to relocate semiconductor production to the United States.

Bessent also announced plans to form a critical minerals alliance with partners including the G7, Australia, India, Mexico, and South Korea to reduce reliance on China for essential resources. He said the bloc is moving swiftly to establish independent mining, processing, and refining capabilities to prevent Beijing from controlling supply chains.

Citing progress in the US, Bessent noted rare earth magnet production has resumed in South Carolina after 25 years, with projections to meet most domestic demand within two years.

On trade and international relations, Bessent confirmed that the US will impose 10% tariffs from Feb. 1 on eight countries that deployed troops to Greenland unless Denmark relinquishes control, with rates set to rise to 25% in June until a full purchase agreement is reached. He also defended President Trump’s NATO policies, arguing European allies must increase defense spending after years of underfunding.

Bessent reported progress in US-China trade negotiations, including the completion of 25 million tons of soybean purchases, and said fentanyl-related tariffs on Mexico, Canada, and China have successfully reduced precursor drug flows. He added that rare earth export controls from China were also rolled back following negotiations.

The Treasury chief dismissed concerns that the US Supreme Court might block the administration’s tariff policies, calling it unlikely that the court would overturn Trump’s “signature” economic agenda.

This warning underscores Washington’s growing concern over global supply chain vulnerabilities and the strategic imperative to diversify semiconductor production and critical resource sourcing.