US trade policy under US President Donald Trump has placed tariffs at the center of economic statecraft. However, Trump has repeatedly shifted positions, demanded sky-high concessions, and renegotiated after agreements — ranging from stacking reciprocal tariffs to the unsettled scope of Section 232 duties — while pressing global semiconductor industries to invest trillions of dollars in the US. For Taiwan, merely reacting to these moves would leave us boxed in.
Therefore, government and industry must join forces to pursue a broader strategic vision that sustains Taiwan’s competitiveness.
Recent revelations about US-South Korea tariff talks provide an example. South Korea offered tens of billions in US shipbuilding investments, dubbed “Make American Shipbuilding Great Again,” to align with Washington’s push for domestic industrial revival, in exchange for tariff exemptions or reductions. Taiwan should take note.
To deal with Trump’s “boss mentality” and savior rhetoric, Taiwan must first acknowledge and communicate to the US side the economic shocks caused by reciprocal tariffs, tariff stacking and the rapid appreciation of the NT dollar. Appeals to democracy, freedom or alliances would carry little weight. What matters is showing Trump what leverage Taipei holds and how it can help him deliver on his promise to re-industrialize the US.
The government has long promoted a “Taiwan Can Help” approach. Taiwan’s unmatched cost-down capabilities and integrated supply chains have already shaped global development. In the 1990s, Taiwanese companies played a pivotal role in China’s rapid rise. Complete industry clusters — including machine tools, auto parts, servers, integrated circuit packaging and testing, functional textiles, and precision machinery — make Taiwan an ideal partner for the US’ re-industrialization.
Between 1990 and 2020, Taiwanese enterprises, large and small, traditional and high-tech, generated an estimated 60 million to 80 million jobs across the Pearl River and Yangtze River deltas. Today, that same ecosystem, including networks built by Taiwanese companies in Southeast Asia, can be leveraged to support US manufacturing growth.
Trump has succeeded in attracting foreign investment in semiconductors, high-tech and autos, but neglected traditional industries. Without substitutes for everyday goods, the US remains dependent on imports from China and Southeast Asia. High tariffs on such goods would only drive up costs, fuel inflation and fail to create enough blue-collar jobs to address income inequality.
Over two decades of deindustrialization have reduced US manufacturing to about 10 percent of GDP. As factories closed, blue-collar workers shifted into lower-paid service jobs with limited advancement, widening wage disparities compared with professional services.
Trump’s insistence that the US has no inflation overlooks two realities: the delay in price adjustments, as firms often avoid immediate hikes, and the inflationary expectations that build once momentum takes hold. With the US Federal Reserve planning rate cuts to stimulate growth, inflation could spiral, eroding his public support and undermining tariff policies. In this context, Taiwan’s dense manufacturing clusters could help rebuild the US’ traditional industries, making re-industrialization more viable.
Challenges remain, including high land, labor and environmental costs, as well as union pressures and a shortage of skilled workers. Yet, with sufficient ambition, the US could establish special economic zones (SEZ), allow limited foreign labor (for example, 20 percent supplementary labor generating 80 percent domestic jobs), ease union restrictions, and adopt automation and artificial intelligence. These measures would make re-industrialization feasible and help create jobs.
For credibility, Taiwan must present concrete commitments: annual investment amounts, job creation targets, vocational training and skilled worker pipelines, as well as key performance indicators. In return, Washington could grant lower tariffs or exemptions. Feasibility should be jointly assessed by both sides, with Japan included to strengthen the industrial spectrum. This would turn Trump’s rhetoric into reality.
Such a strategy is win-win. For the US, with Taiwan and Japan as partners, high-value manufacturing can return, stabilizing blue-collar employment, narrowing inequality, and reducing reliance on Chinese and Southeast Asian imports — helping sustain Trump’s tariff policy and making re-industrialization tangible.
For Taiwan, negotiating access to SEZs, lighter union rules, modest labor flexibility and targeted land or tax incentives could secure valuable first-mover advantages. Taiwanese companies establishing operations in the US would help reduce exports from Taiwan, easing trade imbalances and relieving pressure on the New Taiwan dollar, while also positioning key sectors to benefit from tariff reductions in industries unable to invest abroad.
Moreover, Taiwanese industrial clusters in the US could be springboards for service-sector internationalization. With inflation and high interest rates squeezing US households, Taiwan’s service industries could meet demand through acquisitions, central kitchens or affordable dining.
Dishes such as pork chop boxed meals, wonton noodles, gua bao (割包, a popular Taiwanese street food) with hot-and-sour soup, beef noodles, and stir-fried rice noodles could become popular, while promoting brands like Made in Taiwan or Made in Formosa on the global stage.
Wang Jiann-chyuan is vice president of the Chung-Hua Institution for Economic Research.
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