Since his return to the White House, US President Donald Trump has upended Washington’s trade policy. Trump forced Colombia to accept deported migrants by threatening a 25 percent tariff on all Colombian goods. He also announced a 25 percent additional tariff on imports from Canada and Mexico — which he later paused for 30 days following talks with Canadian and Mexican leaders — and a 10 percent additional tariff on imports from China.
Trump has said that he would raise tariffs on goods from the EU.
On Friday, at a meeting with visiting Japanese Prime Minister Shigeru Ishiba, Trump said he was considering announcing reciprocal tariffs on many countries this week.
While Trump did not specify which countries would be targeted nor provide any details on reciprocal tariffs, his latest pronouncements suggest a shift from his campaign promise of imposing universal tariffs of 10 to 20 percent on all imports into the US.
It would also be a major escalation of his trade disputes with US trade partners if it triggers an across-the-board increase in retaliatory tariffs.
Thus far, Trump has cited concerns over illegal immigration, drug trafficking and trade deficits for his tariff threats, but his main purpose is to restore the US manufacturing industry and curb China’s technology development. It might also be a political tactic leveraging tariffs to make up for the shortfall in tax revenue due to his plans to cut domestic taxes.
The reciprocal tariffs idea is worth noting. Trump during his presidential campaign said that he would work with the US Congress to pass the US Reciprocal Trade Act, which would give him the authority to increase tariffs on imported goods to match the tariffs that a foreign country imposes on similar US goods.
Trump’s real target appears to be countries with significant trade surpluses with the US, as well as those that have particularly high tariff differentials with it. In either case, Taipei is likely to be one of Washington’s next targets.
US Department of Commerce data showed that the US trade deficit last year increased 17 percent to a record US$918 billion. China topped the list, with a trade surplus of US$361.03 billion, followed by Mexico with a record trade surplus of US$172 billion. Other countries that had significant trade surpluses with the US last year include Vietnam, Ireland, Germany, Taiwan, Japan, South Korea, Canada and Thailand.
Trump’s trade adviser Peter Navarro said that the targets for reciprocal tariffs are China and India, followed by the EU, Thailand, Taiwan and Vietnam, with Japan and Malaysia being in the third tier of targets.
As Japan would soon begin importing a record amount of US liquefied natural gas to reduce the US trade deficit with Japan and address the reciprocal tariff threat, per the meeting between Ishiba and Trump, Taiwan could follow Tokyo’s example by importing more US energy. This could also help accelerate domestic energy transformation.
In the near term, engaging in intensive contacts with Trump administration officials and aligning with Trump’s “America First” agenda would give Taiwan an edge over its competitors. Longer term, boosting purchases of US weapons and agricultural products, and collaborating with the US in fields such as drones, semiconductors and artificial intelligence could demonstrate the nation’s determination to maintain a firm relationship with Washington.
It is undeniable that reciprocal tariffs would intensify trade tensions and weaken global trade and economic growth. They are bound to affect export-reliant Taiwan, but they also provide the country with an opportunity to re-examine its economic relations with the US, diversify its export markets and strengthen economic cooperation with Japan, South Korea, India, Southeast Asia and Europe to enhance supply chain resilience.
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