A brewing trade war between the world’s two largest economies would have a limited effect on Taiwan’s high-tech supply chains, given the smaller-than-expected scale of the US’ upcoming tariffs against China, the Ministry of Economic Affairs (MOEA) said yesterday.
Under Section 301 of the US Trade Act, the Office of the US Trade Representative on Tuesday published a list proposing additional tariffs on about 1,300 products imported from China, with the industries affected ranging from aerospace and information and communication technology to robotics and machinery.
The office is to issue a final determination on the products subject to the additional duties after the list of intended tariff increases undergoes further review in a public notice and comment process, it said.
The announcement has raised concerns about whether the US tariff proposal would put pressure on certain Taiwanese suppliers that have production bases in China.
The Bureau of Foreign Trade said in a statement that the possible effect on Taiwan’s high-tech supply chains is less than it previously forecast, as some benchmark products are not included on the list, such as integrated circuits, notebook computers and mobile phones.
Washington’s proposed tariffs are also expected to have a negligible effect on Taiwanese machinery makers and optical equipment suppliers, as products made at their Chinese plants are mostly sold to the Chinese market, and not the US, the bureau said.
Data compiled by the bureau showed that China’s machinery exports to the US are likely to face additional tariffs of about 1.29 percent, while shipments of medical equipment would encounter a 0.5 percent increase in tariffs.
The bureau said it would closely monitor the results of the US’s latest trade proposal.
The Ministry of Science and Technology said it remains to be seen what effects a trade war between the US and China would have on Taiwan’s science and technology sector.
It would continue to encourage the industry to be innovative and engage in research and development to remain competitive, the ministry added.
Taiwanese businesses should take US-China trade relations into account when reaching out to other countries, said Tsai Lian-sheng (蔡練生), secretary-general of the Taiwan-based Chinese National Federation of Industries.
Tsai urged Taiwanese businesses in China to move their production bases outside China or back to Taiwan to minimize the effect of the proposed US tariffs on their operations.
The government must urgently address problems — such as the high corporate income tax rate, labor and other policies — in Taiwan’s investment environment to encourage China-based Taiwanese businesses to return and invest here, Chinese National Association of Industry and Commerce chairman Lin Por-fong (林伯豐) said.
The US has introduced investment incentives that could attract Taiwan’s major enterprises to invest there, leaving companies with inadequate finances and talent in Taiwan, Lin said, adding that small local companies might go out of business as a result of diminishing orders.
Additional reporting by CNA