Taiwanese companies should hold off on major strategic moves in Mexico, a key destination for Taiwanese overseas investment, until the US finalizes its new tariff policies, academics said yesterday, amid uncertainty surrounding proposed duties announced by US President Donald Trump.
Trump on Saturday threatened to impose a 30 percent tariff on goods from Mexico starting on Aug. 1 unless new trade agreements are reached.
Dachrahn Wu (吳大任), director of National Central University’s Research Center for Taiwan Economic Development, said that while Trump has a history of announcing high tariffs to pressure countries into making concessions, the proposed rates have not yet been finalized, leaving room for negotiation.
Photo: Bloomberg
“Taiwanese firms should not act hastily, as land purchases and factory construction involve major capital expenditures,” Wu said. “Premature moves could trigger capital flight and steep losses in asset values.”
He recommended that firms wait until after Aug. 1 — when the US trade outlook is expected to become clearer — before adjusting their overseas investment strategies.
More than 300 Taiwanese companies have set up manufacturing operations in Mexico over the past few years, drawn by its proximity to the US and the global trend toward nearshoring.
Wu said that if the proposed tariffs are implemented, Taiwanese companies operating in Mexico would face higher production costs and weakened competitiveness.
However, even if a 25 or 30 percent tariff is eventually applied to Taiwan directly, there might still be opportunities to negotiate for a reduced rate, he added.
Darson Chiu (邱達生), an economist at Tunghai University, said that while countries have received tariff notices from Trump, the rates are not final and remain subject to negotiation.
Nevertheless, Chiu said that the uncertainty introduced by Trump’s announcement has added complexity to Taiwan’s trade position.
Despite Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) committing to invest an additional US$100 billion in the US and produce advanced chips there, Trump’s trade strategy prioritizes countries that “fully accept” his terms during trade negotiations.
Chiu cited Japan as an example, which has sent representatives to Washington seven times since April, but due to Japan’s firm position on sensitive sectors such as cars and rice, the US raised the proposed tariff on Japanese imports to 25 percent — 1 percent higher than the rate discussed in April.
Regarding Taiwan, Chiu said that President William Lai (賴清德) and the Executive Yuan have recently reiterated their commitment to protecting public health in trade talks with the US.
This might signal continued resistance to easing restrictions on imports of US pork and beef, he said.
However, if the US threatens to impose high tariffs on Taiwan, there is no need for immediate concern, as negotiations would still be possible, he added.
He also said that the Aug. 1 implementation date for Trump’s proposed tariffs might not necessarily be fixed.
Total cumulative Taiwanese investment in Mexico has reached about US$3 billion, supporting more than 50,000 jobs, Ministry of Economic Affairs data showed.
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