The new 20 percent tariff rate the US set on goods from Taiwan is “temporary,” and the government expects to negotiate a lower figure, President William Lai (賴清德) said yesterday.
Tariff rates on semiconductors, electronics, and information and communications technology products are to be determined separately under forthcoming US sectoral measures.
The rate set by the US was one of several so-called “reciprocal” tariffs imposed by US President Donald Trump, just hours before a deadline to finalize trade frameworks with his administration.
Photo: AFP
Although lower than the 32 percent tariff initially proposed for Taiwan in April, the new 20 percent rate still exceeds those granted to regional competitors, such as Japan and South Korea, which face only a 15 percent levy.
The tariff was formalized in an executive order signed by Trump and is set to take effect on Thursday next week.
While key Taiwanese exports — such as semiconductors — are largely exempt, the effective average tariff on shipments from Taiwan would rise to 8.3 percent from 5.8 percent, said Bumki Son, an economist at Barclays Bank.
Photo: CNA
“The 20 percent tariff rate was never Taiwan’s target to begin with. We will continue negotiations and strive for a rate that is more favorable for Taiwan,” Lai told a news briefing.
Trade talks between the US and Taiwan are continuing, a US official confirmed yesterday, adding that a final agreement is close.
“The interim rate is lower than the original rate, and it’s much lower than that of several other major trading partners with ongoing negotiations,” said the official, who spoke on condition of anonymity.
Taiwan’s offer was well received, and the two sides are close to a final agreement, the official added.
Taiwan is also awaiting the outcome of a US investigation under Section 232 of the Trade Expansion Act, which includes probes into sectors such as semiconductor products — a cornerstone of Taiwan’s exports that remains exempt from the newly imposed tariffs.
“Taiwan and the US will continue negotiations, with upcoming discussions to also include supply chain cooperation and issues related to Section 232 investigation,” the Executive Yuan said. “If an agreement is reached, there is a possibility of further reducing reciprocal tariff rates and securing preferential treatment on tariffs related to the Section 232 investigation.”
The final tariff rates would inevitably impact Taiwanese industry, Lai said.
He praised Premier Cho Jung-tai (卓榮泰) and the Executive Yuan for proposing the Special Act for Strengthening Economic, Social and National Security Resilience in Response to International Circumstances (因應國際情勢強化經濟社會及國土安全韌性特別條例) in April, which ultimately earmarked NT$930 billion (US$30.97 billion) in relief funds.
Lai urged the Cabinet and the Legislative Yuan to implement the proposal without delay to support small and medium-sized enterprises as they face growing pressure from the new tariffs.
Countries engaging in tariff talks with the US have signed a confidentiality agreement, which is why the government is not allowed to publicize negotiation details before the talks are concluded, Lai said in response to opposition parties’ accusations of “keeping the public in the dark.”
The government would publish news concerning the joint statement once the result is finalized, he said.
Taiwan recorded a trade surplus of about US$65 billion with the US last year, driven by strong US demand for Taiwanese technology products amid the artificial intelligence boom.
That trade imbalance was likely to rankle Trump, who has pledged to reshape US trade relationships.
Taiwan’s exports to the US last month surged to a record US$17.3 billion, as firms rushed to ship goods ahead of the new tariffs taking effect.
Similarly strong exports have propelled Taiwan’s economy, although analysts have warned that growth could taper over the rest of this year — partly due to worries about the Trump duties.
The effect of the tariffs on Taiwan might be more severe than their rates alone would suggest, given that the New Taiwan dollar has gained about 11 percent against the US dollar this year.
While the government has repeatedly denied speculation that the appreciation was part of concessions made to the US during negotiations, a much stronger exchange rate has taken a toll on many Taiwanese exporters.
Taipei had signaled it would step up its procurement of US goods, including energy, agricultural products and military equipment, to help alleviate the trade imbalance.
Taiwan had also pledged to bolster investment in the US and close export control loopholes for high-tech products that have long been a concern for Washington as it tries to curb China’s innovation due to fears it would provide a military edge.
Additional reporting by Chen Cheng-yu
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