Taiwan’s tech sector would likely avoid the worst effects of US President Donald Trump’s latest tariff threat, although the full impact is still unclear as there are no concrete details yet, two academics said.
“Whatever countries charge the United States of America, we will charge them. No more, no less,” Trump said when he announced plans to hit exports from countries that he said have trade policies that are unfair to the US.
US secretary of commerce nominee Howard Lutnick said that individual country reviews would be completed by the beginning of April, while a White House official said that action could be implemented within a few weeks.
Photo: Reuters
East-West Center in Washington adjunct fellow Chiang Min-hua (江敏華) said it is hard to gauge the impact of the tariffs, because it is unclear how they are to be calculated.
Under a product-to-product tariff system, if Taiwan imposes tariffs on US information and communications technology, the US would implement the same levy, she said.
Meanwhile, an average value tariff system would mean that Washington would apply a flat rate to all Taiwanese imports, based on the average tariff Taipei imposes on US goods, she added.
Trump’s tariff policy aligns with the promises he made during his presidential campaign to cut taxes and reduce the federal government’s budget deficit by using revenue from tariffs to offset the shortfall, Chiang said.
However, tariffs would likely drive up prices and shift the government’s revenue source from taxpayers to consumers, she added.
Reciprocal tariffs would also go against the WTO Information Technology Agreement, Chiang said.
However, Trump has shown little regard for multilateral organizations, she added.
Even if Trump was determined to impose tariffs on Taiwanese chips, the impact on Taiwan’s chipmakers would be limited, she said.
Only small quantities of semiconductors are exported to the US, Chiang said, adding that most of them are assembled into finished products in other Asian countries before being shipped to the US.
“What is more concerning is the potential US pressure on Taiwan to transfer its semiconductor manufacturing technology or factories to America,” she said.
However, such a shift in production would be difficult to accomplish unless the US government is willing to provide significant subsidies, as building a semiconductor fab takes several years and substantial investment, Chiang said.
George Washington University economics lecturer Jeffrey Kuo (郭哲瑋) said that Taiwan exports a wide range of products to the US, but the majority are related to machinery and electronic equipment.
As Taiwan imposes few tariffs on imports of machinery and electronic components from the US, a reciprocal tariff policy would have a limited effect, Kuo said, adding that such tariffs would likely not align with US interests and might even harm consumers.
Electronics components and related products imported by the US from Taiwan are crucial to the global supply chain, unlike Mexican agricultural products or Canadian pharmaceuticals, which US consumers directly purchase, he said.
Tariffs on Taiwanese products would therefore affect US brands and manufacturers that produce electronics, and that extra cost would likely be passed onto consumers, he added.
There are also few alternatives to Taiwan’s exports to the US, Kuo said, citing demand from Tesla and Apple for Taiwan Semiconductor Manufacturing Co chips as an example.
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