Taiwan chip dominance 'biggest threat to world economy,' says Bessent

DAVOS

U.S. Treasury Secretary Scott Bessent identified Taiwan's overwhelming control of advanced semiconductor production as the gravest danger facing the global economy, warning that any disruption would 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 percent 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 the island's manufacturing capacity as an "economic apocalypse," emphasizing Washington's efforts to relocate semiconductor production to American soil.

Bessent announced efforts to form a critical minerals alliance, including the G7, Australia, India, Mexico and South Korea, to break China's stranglehold on essential resources.

He said the bloc is working rapidly to establish independent mining, processing and refining capabilities to prevent Beijing from wielding "the sword over our heads."

Bessent cited rare earth magnet production resuming in his home state of South Carolina after a 25-year absence, with producers projecting they can meet most U.S. demand within two years.

The Treasury secretary also reported progress in trade talks with Beijing, including the completion of annual soybean purchases totaling 25 million tons.

Bessent described fentanyl-related tariffs on Mexico, Canada and China as successful in forcing cooperation, noting "a substantial drop" in precursor drug flows after Chinese officials came to negotiations. He added that the threat of tariffs has worked well with Beijing, as they rolled back rare earth export controls in October.

Bessent also dismissed concerns that the Supreme Court might block the Trump administration's tariff policies, calling it unlikely the court would overturn the president's "signature" economic agenda.