China has issued trade restrictions on Taiwan after United States House Speaker Nancy Pelosi's visit to the island nation despite Beijing's threats that the trip undermines its sovereignty.

The sanctions include the suspension of some fruits and fish imports from Taiwan and exports of natural sand to the island nation. China is known to be Taiwan's largest trading partner, with bilateral trade worth $273 billion just last year, and accounts for 33% of the island's total trade with the rest of the world.

China's Sanctions on Taiwan

Furthermore, experts have a growing concern about the impact that escalating tensions between Taipei and Beijing may have on Taiwan's semiconductor industry. The island nation is home to roughly 24 million people and is known to be a global leader in the supply of semiconductor chips to other nations, which are seen as vital components for virtually all modern electronics.

On Wednesday, China's Taiwan Affairs Office said that it was suspending imports of grapefruit, lemons, oranges, and other citrus fruits, as well as chilled white striped hairtail and frozen horse mackerel from Taiwan, as per CNN.

Chinese customs officials said in a separate statement that the suspension of imports of citrus fruits is a result of "pest control" and "excessive pesticide residues." It cited "COVID prevention" for the implementation of the suspension on seafood imports.

Meanwhile, China's commerce ministry suspended exports of natural sand to the self-governing island nation, which is a key component in the production of semiconductor chips. Analysts from ING Group said on Wednesday that Pelosi's trip to Taiwan has triggered the expected ire of Chinese authorities.

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According to Fortune, chip stocks plunged after Pelosi arrived in Taiwan and the chip sector, in particular, could lose big if China continues its sanctions. China repeatedly called the American official's visit a direct threat amid its claims that Taiwan is part of its territory.

Semiconductor Industry

Beijing has also warned that the Chinese army will not "sit idly by'' and will take "strong countermeasures." On Tuesday, semiconductor stocks plunged in anticipation of Pelosi's visit to the self-governing island nation.

Shares of Taiwan Semiconductor Manufacturing Co. (TSMC), the world's biggest and most valuable semiconductor manufacturer, valued at $440 billion, fell 2.4% on Tuesday. Its Taiwanese peers, United Microelectronics and MediaTek dipped by 3% and 1.6% respectively. On the other hand, U.S. chipmaker Intel's stocks dropped 1.5% on the same day.

While Pelosi was preparing to meet with Taiwanese President Tsai Ing-wen on Wednesday, technology investors were monitoring her moves closely while looking out for any sign of retaliation from China.

Chipmakers, particularly those in Taiwan, are at high risk of becoming collateral damage if there is a falling out between the United States and China. Taiwan has a sizable role in the global chip supply chain, as its manufacturers are especially important suppliers of advanced chips.

On top of the effects on the semiconductor industry, China also said it would launch a series of military exercises around the island in response to Pelosi's trip, parts of which will enter Taiwanese waters, NBC News reported.

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