The 20 percent tariff the US imposed on Taiwanese exports is “not the worst,” as securing a lower rate would have required Taiwan to pay a steep price, Tunghai University economist Darson Chiu (邱達生) said yesterday.
The tariff was higher than expected and far from ideal, but not the worst outcome, as Taiwan’s negotiating team held firm on its bottom line to avoid paying a much higher price, Chiu said.
Otherwise, Taipei could have reached an agreement with Washington for a 15 percent tariff — on par with Japan and South Korea, which are Taiwan’s direct competitors in the global market, he said.
US President Donald Trump’s “reciprocal” tariffs were first unveiled on April 2 as part of a sweeping package that included a proposed 32 percent duty on Taiwanese goods.
While the government has not disclosed details about its negotiations with the US, Chiu said that if Taiwan had agreed to invest US$400 billion in the US, it would have secured a 15 percent tariff — as the market had anticipated — but that investment would have been nearly 50 percent of Taiwan’s GDP last year and could have undermined the nation’s long-term economic development.
Japan has agreed to invest US$550 billion in the US and open its agricultural market, including rice, to US exporters, while South Korea has pledged a US$350 billion investment.
While a 15 percent tariff would have helped Taiwan maintain its competitive edge against Japan and South Korea, it might have come at a cost elsewhere, he said.
Taiwan would need the Legislative Yuan’s approval for any trade agreement with the US, and building domestic consensus would pose a major challenge for the government, Chiu said.
As Taiwan’s main goals during the tariff talks were to protect national and industrial interests, and ensure food security and public health, Chiu said he believed the government had carefully assessed the situation and chose not to make excessive concessions for now, opting instead to pursue further negotiations in the nation’s interest.
Natixis SA senior economist Gary Ng (吳卓殷) said the rate “is not the best outcome, as it is higher than Asian manufacturing powerhouses.”
“While the impact on Taiwan’s high-end semiconductors may be limited, as there are no alternatives with exemptions in place, other sectors can face greater pressure in exporting to the US due to the tariff gap with competitors,” he said.
Hudson Institute senior fellow Jason Hsu (許毓仁) said that “at face value, it is bad, but strategically, it is manageable.”
“If Taiwan can negotiate a bilateral deal quickly and mitigate the tariffs through concessions, investment and procurement, the scenario could transition from punitive to constructive,” Hsu said.
Meanwhile, a source on condition of anonymity said yesterday that Beijing continued to pressure Washington through back channels during tariff negotiations with Taipei, hoping to learn details of Taiwanese investments.
China does not want to see closer Taiwan-US ties, as that would not be in Beijing’s interests, the source said, adding that any trade negotiations between Taipei and Washington would strengthen Taiwan politically and affect cross-strait relations.
Beijing also does not wish to see Taiwan-US trade talks conclude sooner than US-China trade talks, nor does it wish to see Washington and Taipei use the opportunity to take bilateral commerce to the next level, the source said.
Additional reporting by Su Yung-yao and Bloomberg
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