UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Paying for power'
Jan 16, 2026
Taiwan's new 15% tariff agreement with the US could signal bigger changes ahead, especially if the Supreme Court acts on tariffs. There’s skepticism about Taiwan's investment pledges, suggesting they may just be rebranded old plans. Meanwhile, rising US industrial production is straining electricity demand and prices. In a twist, Trump proposes an auction for tech firms to support new power plants, but supply constraints might hinder development. Despite tariffs, US manufacturing struggles to regain footing, with gains mainly in chips and electronics.
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Treat Investment Pledges With Skepticism
- Taiwan pledged semiconductor companies would invest $500 billion in the US, but Donovan says such promises often reflect existing plans.
- Markets should treat these investment pledges cautiously as they are rarely verified.
15% Tariff Is A Political Placeholder
- The US and Taiwan agreed US importers will pay a 15% tariff on Taiwanese goods, tied to semiconductor investment pledges.
- Paul Donovan warns the 15% figure is politically convenient and may hedge against legal limits on other tariffs.
Tariffs Create Market Uncertainty
- Markets will likely remain muted because Supreme Court uncertainty and tariff unpredictability reduce clarity.
- Donovan notes tariffs are an unreliable tool, citing recent unserious-sounding tariff assertions by President Trump.