The 20 percent tariff that the administration of US President Donald Trump has imposed on Taiwan appears “reasonable” compared with the rates imposed on other economies in the region, and a rate cut is possible after further negotiations, US experts said on Friday.
The levy, which was lower than the 32 percent announced by the US on April 2, matches those applied to Vietnam, Sri Lanka and Bangladesh, but is higher than the 15 percent for Japan, South Korea and the EU, and the Philippines’ 19 percent.
The announcement came one day before Friday’s deadline for countries to reach agreements with the US on tariff reductions.
Photo: EPA-EFE
Hudson Institute senior fellow Riley Walters said that 20 percent is a “pretty reasonable” rate for Taiwan, as the country did not have to “offer up hundreds of billions of dollars worth of new investment or agricultural purchases, Boeing purchases or the removal of non-tariff barriers.”
Walters said that Japan’s 15 percent rate was a privilege the country “paid for,” as Tokyo had to pledge to invest US$550 billion in the US market, adding that Taiwan’s rate was only slightly higher than that of many of its regional competitors.
President William Lai (賴清德) called the rate “provisional,” saying that the US remains open to further tariff discussions with Taiwan, as the trade deal was yet to be finalized.
US-based economics analyst Jeffrey Kuo (郭哲瑋) said that Trump’s tariff policies were a politically oriented announcement, adding that he does not see any theory behind the tariffs.
“I think it is possible for Taiwan to see a cut from 20 percent if Taipei is able to offer more incentives to Washington and come up with more policies to benefit the US, such as the creation of more jobs through more investments in US markets,” he said. “Taiwan has to make a concession for a tariff cut.”
Walters said it would be challenging for Taiwan to secure a lower tariff, because “there is really no telling how low this [Trump] administration wants to go on tariffs.”
A lower tariff would depend on the trajectory of the trade deficit the US has with Taiwan, he said, adding that if the trade deficit shows signs of trending lower, Taipei could seek a lower tariff rate.
Taiwan is the sixth-largest contributor to the US trade deficit, with Taipei’s trade surplus with the US increasing from US$47.8 billion in 2023 to US$73.9 billion last year.
Taiwan could promise new investments as leverage, but “there is a level of this administration that just wants to see higher tariffs, and there is no negotiating around that,” Walters added.
With Trump advocating “Made in the US,” his administration has urged the manufacturing sector to return to US soil by imposing tariffs on certain industries, such as 25 percent on the auto industry and 50 percent on steel and aluminum goods.
The US is likely to impose a minimum rate of 15 percent on semiconductor imports, but there could be exclusions, as seen occasionally in Trump’s tariff arrangements over the past six months, he said, adding that companies should try to seek an exclusion on semiconductors if a levy is imposed.
“Maybe they’ll be lucky enough for their products to avoid such a high tariff rate,” Walters said.
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