After the 90-day tariff-free grace period ended this month, Taiwan avoided the letters that US President Donald Trump sent to over two dozen other governments establishing new tariffs, including a 25 percent rate.dutyon products from Japan and South Korea.
Is the letter from Taiwan still in transit?
The administration of Donald Trump introduced global tariffs on April 2, featuring double-digit charges for several Asian exporters and a 32 percent rate targeted at Taiwan. The United States subsequently put most of these tariffs, including those on Taiwan, on hold for 90 days to discuss revised rates with key trading partners.
Are you curious about the major issues and developments happening globally? Find the solutions withSCMP Knowledge, our latest platform offering handpicked content including explainers, FAQs, analyses, and infographics, presented by our acclaimed team.
Taiwanese and U.S. officials have convened three times since April, including a discussion this month, indicating that both parties are attempting to reach an agreement, according to analysts.
Similar to Japan and South Korea, another Asian exporting nation, Taiwan, maintains a significant trade surplus with the United States — a factor that motivated Trump's advocacy for increased tariffs.
Nevertheless, analysts noted this week that the lack of a Taiwan letter so far indicates that both parties are still in discussions to ensure new US tariffs remain acceptable for Taiwan, which provides cutting-edge semiconductors for leading American technology companies.
"Reciprocal tariffs are no longer a major issue for Taiwan," stated the DBS Group Research, based in Singapore, in an email sent to journalists on Friday.
"At this moment, they are still in the final stage of the negotiations as they aim to finalize the agreement," said Chen Yi-fan, an assistant professor of diplomacy and international relations at Tamkang University in Taiwan.
The two parties are in a deadlock regarding tariff rates for automotive trade and U.S. exports of agricultural products, but according to Chen, an agreement is expected to be reached by August 1. He mentioned that his forecast was partly influenced by discussions with individuals connected to the U.S. government.
On July 8, representatives from both parties "attempted to establish agreement" on "several critical matters," and discussed future actions, according to a statement released by the Taipei government last week.
By May, the discussions had expanded to include non-tariff related topics such as additional trade obstacles and "economic security," stated Taiwan's Vice Premier Cheng Li-Chun in a press release. Economic security typically relates to each party's general capability when confronting external competition or supply chain challenges.
"Taiwan has shown willingness and strategic cooperation with the United States in various important areas, such as boosting our investments in semiconductor production," said Darson Chiu, CEO of the Confederation of Asia-Pacific Chambers of Commerce and Industry in Taiwan.
He stated, 'These steps demonstrate Taiwan's ongoing initiatives to enhance economic relationships and reduce possible trade conflicts.'
The value of goods imported by the United States from Taiwan reached $116.3 billion in the previous year, marking an increase of 32.5 percent compared to 2023, and accounting for the bulk of the $158.6 billion total two-way trade between the U.S. and Taiwan in 2024, as reported on the Office of the U.S. Trade Representative's website. Taiwan's trade surplus rose by 54.6 percent during that period from 2023.
The starting 32 percent tariff ratesurprisedMany in Taiwan are aware because Taiwan Semiconductor Manufacturing Company, the island's leading technology company and the world's largest contract chipmaker, has announced a US$100 billion investment in semiconductor manufacturing in the U.S. state of Arizona and has received personal praise from Trump.
TSMC provides semiconductors to renowned American consumer technology companies like Apple and Nvidia.
In response to Trump, Taiwan's leader William Lai had previously announced an increase in military expenditure to over 3 percent of Taiwan's gross domestic product this year.
Mainland China asserts Taiwan as a part of its territory, emphasizing reunification through force if required. Many nations, including the United States, do not acknowledge Taiwan as a sovereign country, although Washington opposes any effort to seize the self-governing island by force and remains dedicated to providing it with arms.
"Taiwan is an overseas economic entity that the US needs to support more actively," said Ken Wu, president of the Los Angeles chapter of the Formosan Association for Public Affairs advocacy group, in order to decrease economic reliance on mainland China.
Apart from TSMC and defense issues, Trump believes he can still extract more from Taiwan via tariffs, considering the size of the US market and the expectations in Taiwan that the US will provide military support, according to Liang Kuo-yuan, former president of the Polaris Research Institute economic think tank in Taipei.
Trump, driven by his business mindset, believes he can achieve more," Liang stated. "It's not truly balanced. Taiwan relies on the US for its defense.
Taiwan and the United States, during Trump's administration, have ceased discussions on a trade deal that was anticipated to address labor and environmental issues, according to a deputy trade representative from Taipei in March.
The administration of former US President Joe Biden initiated these discussions under a framework known as the US-Taiwan Initiative on 21st Century Trade, and in 2023, both parties reached their initial agreement under this program.
Small to medium-sized technology companies in Taiwan might face difficulties if the US imposes a 30 percent tariff, according to analysts. This could be divided between exporters and importers, with potential additional costs passed on to consumers.
However, Chen stated that these companies would likely continue to sell to the US market due to its large scale.
If the semiconductor tax were to apply to a wide array of information and communication technology goods, "it would pose a significant challenge," according to the DBS research report.
More Articles from SCMP
Hong Kong plans to recover 190 hectares of land to create room for contemporary industries.
Can the China-supported SCO persuade India and Pakistan to settle their disputes?
EU imposes penalties on two Chinese banks for supporting Russia
This piece was first published in the South China Morning Post (www.scmp.com), a top news outlet covering China and Asia.
Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.
Posting Komentar