The government should run simulations of possible US tariff scenarios and prepare tailored countermeasures to help local businesses weather the looming levies. Such planning would be especially critical for the machinery, molding and auto sectors, even as Taiwan’s negotiation team continues striving for more favorable tariff terms and the elimination of stacking duties.
Remarks by Minister of Economic Affairs J.W. Kuo (郭智輝) highlighted that the ministry remains underprepared for the trade turbulence ahead. During a meeting with local manufacturers on Monday last week, Kuo floated the idea that China Steel Corp could grant price concessions to auto parts suppliers to help offset costs. His suggestion came amid concerns that a finalized 20 percent US tariff on Taiwanese goods would erode competitiveness, particularly when rivals in Japan and South Korea face a lower 15 percent duty.
China Steel, Taiwan’s largest steelmaker, was caught off guard, as the company was not informed in advance of the proposed policy. Kuo’s suggestion drew strong objections from the Labor Union of China Steel Corp, which said such concessions would undermine corporate governance and further weaken a firm that has already slipped into losses.
China Steel is struggling to stay profitable amid a global steel slump that has dampened demand and depressed prices, the union said. The company reported a net loss of NT$1.66 billion (US$55.11 million) in the first half of this year, a reversal from the NT$1.96 billion profit recorded during the same period a year earlier.
The union said the ministry should exercise more caution and instead roll out substantive support measures, such as reduced water and electricity rates or targeted subsidies. This is also not the first time the government has asked China Steel to shoulder policy burdens. In 2018, the company established Sing Da Marine Structure Corp to support the government’s offshore wind localization initiative, ultimately incurring losses of NT$6.4 billion, the union said.
Kuo later sought to clarify his remarks, saying he was proposing a 5 percent discount for small-scale screw and steel nut producers, structured similarly to price cuts already available to distributors. He said that such bulk-purchase discounts are common in retail and would not disrupt China Steel’s pricing mechanism.
Still, Kuo’s proposal appeared more ad hoc than the product of a thorough assessment or coordination with stakeholders. Instead of offering constructive solutions, his comments sparked unnecessary controversy.
The ministry has said that it would recommend that the Ministry of Finance review the commodity tax on vehicles to stimulate domestic car demand and accelerate the retirement of older vehicles. Since US President Donald Trump announced the “reciprocal” tariffs in April, industry experts and economists have repeatedly raised the possibility of reducing commodity taxes and car import duties as ways to address non-trade barriers.
However, little progress has been made due to government inertia. The ministries should have already explored a range of options, such as fully scrapping the duties or implementing targeted tax cuts.
Both ministries have continued to say that they would have to await the results of trade talks before disclosing any tactical steps, but this has fueled doubts over whether genuine cross-ministerial or interagency coordination is taking place. Empty assurances are the last thing businesses need at this stage.
The government needs to be more transparent about the policymaking process and should at least provide guidance to help local companies model different scenarios and prepare strategies to withstand the looming tariff shock.
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