Taiwan would lift its quotas on vehicles manufactured in accordance with US regulations and would eliminate tariffs on sedans imported from the US, under the terms of a bilateral trade deal signed in Washington on Thursday.
Vehicles conforming to the US Federal Motor Vehicle Safety Standards would be exempt from import quotas, the Cabinet said yesterday.
Importers must obtain a safety certificate from the Ministry of Transportation and Communications, it said.
Photo: AFP
Importers must apply to the ministries of economic affairs and the environment for three certificates, the Cabinet said.
Easing import quotas is part of the trade deal signed by Taipei and Washington to open the Taiwanese market wider to US products, given Taiwan’s US$73.9 billion trade surplus with the US in 2024, the sixth largest among US trade partners.
The import quota — defined by the number of units of the same model a single importer might apply for annually — had shrunk from 2,000 in 2008 to just 75 in 2023, disincentivizing the import of US vehicles to Taiwan.
Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said Wednesday that lifting the 17.5 percent tariff on vehicles imported from the US is expected to reduce the total tax burden on consumers by about 10 percent.
Based on projections from a think-tank model, Kung said lowering tariffs on US-made vehicles is estimated to affect domestic automobile output by about 1.94 percent, or roughly NT$4 billion (US$126.9 million) per year.
The change is likely to impact European and Japanese car manufacturers more than Taiwanese automakers, he said.
Wu Jui-hung (吳睿弘), executive director of PG Union Corp Taiwan, yesterday said that the trade deal should not have any significant impact on domestic vehicle manufacturers main models for the next three years.
He said US-spec vehicles are usually priced at about US$40,000 in the US and are subject to a 25 percent commodity tax in Taiwan.
This “gives imported vehicles little edge” compared with mainstream models produced by domestic carmakers, which are mostly priced at NT$800,000 to NT$1.1 million, Wu said.
While local consumers would appreciate having more options, in the long run, the share of imported vehicles could expand from 50 percent to about 60 percent, he said.
Last year, imported vehicles held a 48.7 percent share of the Taiwan market, with sales of 202,000 units, according to Ministry of Economic Affairs data.
The market share for domestically produced vehicles has steadily declined, dropping from 63.2 percent in 2015 to 51.3 percent last year, the data showed.
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