Taiwan needs to urgently focus on announcing policies and investment plans in support of US President Donald Trump’s administration, instead of hoping to change the US president’s view on the semiconductor industry and trade, US-Taiwan Business Council president Rupert Hammond-Chambers said.
Hammond-Chambers made the remarks in an interview with the Central News Agency on Thursday, saying that tariffs are at the core of Trump’s plans to change the nature of bilateral and multilateral trade relationships and accelerate inbound investment into the US.
Over the past few days, the Trump administration has threatened to impose tariffs of up to 100 percent on chip imports from Taiwan, and the US president has repeatedly accused Taiwan of stealing the US semiconductor industry.
Photo: Ann Wang, Reuters
The growing trade imbalance between Taiwan and the US has put Taiwan “in the crosshairs of the Trump administration,” Hammond-Chambers said.
The US posted a record trade deficit of US$73.9 billion with Taiwan last year, the fifth-highest among its trade partners, data from the US Census Bureau and the US Bureau of Economic Analysis showed.
The US’ highest trade deficit last year was with Mexico, at US$171.8 billion, followed by Vietnam (US$123.5 billion) and Ireland (US$86.7 billion), the data showed.
Hammond-Chambers said President William Lai’s (賴清德) recent proposal to encourage Taiwanese businesses to invest in the US and increase procurement of US products to “promote balanced trade” between the two sides is a “smart decision,” adding that “40 percent or thereabouts of Taiwan outbound investment is coming already to the US”
Lai had said his administration would continue communicating and negotiating with the US to enhance mutual understanding, when he announced the proposal in Taipei on Feb. 14.
However, Hammond-Chambers said he does not believe the Trump administration is interested in that approach, whether it be with Taiwan, the EU or any other country.
“They are making it clear that they’re prepared to do these tariffs ... I don’t think hoping that Taiwan can persuade President Trump and his colleagues of a different way to think about the semiconductor industry is a realistic approach to the bilateral relationship right now,” he said.
“I understand that there’s some frustration around it. I would not personalize it toward Taiwan specifically. The Trump administration is doing it to everybody,” he added.
Hammond-Chambers also pointed to legislation passed by the US Congress to end double taxation for the US and Taiwan, which he said “was conceived as part of an effort to increase the pace of Taiwanese investment into the United States, specifically in the semiconductor industry.”
Hammond-Chambers said the Trump administration would like to see Taiwan’s defense spending to be more in line with countries that also face existential threats, such as South Korea and Israel.
It is difficult for Taiwan to increase its defense spending to 5 percent of its GDP right away, he said.
However, Lai can demonstrate good faith by moving it up a half percentage point in one year, which is a very significant increase, particularly for an economy as large as Taiwan’s, he added.
“The important thing is to telegraph intent and seriousness,” Hammond-Chambers said.
“If they’re going to do a special defense budget, do it soon. Do it as soon as is possible. Make some positive noise that will get a good response,” he said.
Lai has recently pledged to propose a special budget plan to increase defense spending to more than 3 percent of GDP, a significant increase compared with the administration of former president Tsai Ing-wen (蔡英文) from 2016 to last year, when defense spending was between 2 and 2.5 percent.
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