The 20 percent baseline tariff imposed by the US on goods from Taiwan, combined with an appreciating New Taiwan dollar, could significantly hurt the nation’s machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said yesterday.
TAMI said that starting on Aug. 7, Washington began implementing reciprocal tariffs, setting a provisional 20 percent baseline for Taiwan — higher than the 15 percent applied to Japan and South Korea.
After adding the new 20 percent rate to existing most favored nation (MFN) duties and other trade remedy tariffs, Taiwanese machinery products shipped to the US will face an effective tariff about 10 percent higher than those from Japan and South Korea, the association said.
Photo: EPA-EFE
When factoring in the NT dollar’s sharp appreciation since April, the effective price gap with Japan and South Korea widens to about 20 percent, which TAMI warned could severely undermine the competitiveness of Taiwanese machinery exports.
Previously, the average tariff on Taiwanese machinery exports to the US was about 5 percent, while Japanese and Korean products often enjoyed zero tariffs, the TAMI noted.
The association said the stronger NT dollar has an even greater impact than the tariffs. From 2021 to July 31 this year, the NT dollar depreciated only 4.6 percent, compared with declines of 46.2 percent for the yen and 28 percent for the won.
Taiwan’s traditional price advantage — with equipment priced 20-30 percent lower than Japanese products — has effectively disappeared, especially for machine tool exports, leading to a sharp drop in orders, according to the association.
Given the higher US tariff rate for Taiwan compared with key competitors and the currency’s effect on export competitiveness, TAMI urged the government to take steps to safeguard the industry’s position in global markets.
Separately, the association yesterday reported that Taiwan’s machine tool exports last month reached US$2.79 billion, up 13.4 percent from a year ago, marking six consecutive months of growth.
From January to last month, machinery exports reached US$17.71 billion, an annual increase of 6.5 percent. In NT dollar terms, the total was NT$558.17 billion, up 5.1 percent.
The NT dollar’s appreciation this year has eroded both the real growth of exports and the actual income of companies, the TAMI said. The US and China remain Taiwan’s two largest export markets, with shipments to China rising 3.8 percent year-on-year to US$4.07 billion in the first seven months, and exports to the US increasing 16.1 percent to US$4.72 billion.
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