Reducing import tariffs on complete vehicles would weaken the domestic automobile and automotive electronics industries, the Taiwan Transportation Vehicle Manufacturers Association (台灣車輛公會) said yesterday, while expressing hope that the government would pay more attention to the long-term development of domestic industries.
In a statement issued after US President Donald Trump announced the imposition of a 25 percent tariff on imported vehicles starting on Wednesday next week, the Taipei-based association said that the higher levies imposed by the US would have little impact on Taiwan’s automobiles and Trump’s purpose is to expand the establishment of production facilities in the US by global automakers.
Taiwan should not unconditionally and proactively reduce import tariffs on complete vehicles in response to the US move or it would have an irreparable effect on the entire automobile industry chain in Taiwan, the statement said.
Photo courtesy of the Taiwan Transportation Vehicle Manufacturers Association
“Tariffs are an important policy tool for international trade and industrial development,” it said. “The US set the tariff rate for passenger cars at 2.5 percent before the imposition of new tariffs, but places a 25 percent tariff rate for pickups, which are popular in the US, as it wants to keep them made in the US.”
Vehicle exports to the US are relatively low compared with other countries, it added.
Taiwan imports about NT$30.3 billion (US$915.32 million) of vehicles a year from the US, while it exports about NT$3 billion to the US, the association said, citing Ministry of Finance data.
“Auto tariffs involve trade balance issues and relevant policies need to be carefully evaluated,” it said.
If the government reduces tariffs on imported passenger vehicles to zero, or to 2.5 percent from 17.5 percent, it would lead to the loss of tax revenue and undercut the competitiveness of Taiwan’s automobile industry, the statement said.
That would negatively affect firms throughout the supply chains of the domestic automobile and automotive electronics industries, which generated a combined production value of NT$994.8 billion last year, it added.
The government should conduct a comprehensive and prudent assessment when formulating tariff policies and take into account the long-term development of domestic industries, as the auto industry involves large industrial chains including steel, plastics, rubber, glass, machinery, motors, electronics and other services, the association said.
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