U. S. “Reciprocal tariffs” on Taiwan’s tax rate of up to 32% , in the Democratic Progressive Party authorities completely unexpected, causing shock from all walks of life on the island. Taiwan’s“Premier” Chuo Rung-tai took forty hours to announce the response measures. From the news to the community to the grassroots, many people criticized the DPP authorities for doing nothing, always bragging about the“Rock solid” relationship with the United States, only to be stabbed in the back. William Lai’s“Five strategies” to deal with US tariffs, announced on Tuesday, have been criticised for“Hollowing out Taiwan”.
“Small tool makers fear closure.”
After the announcement of the 32% tariff rate imposed by the United States on Taiwan, Taiwan’s“Vice Minister of Economic Affairs,” he jincang, held a press conference on the afternoon of April 4 and said that 2024 Taiwan’s exports to the United States reached US $111.4 billion, accounting for 23% of total exports, the trade surplus with the United States was $64.9 billion. Taiwan’s main exports to the United States include electronic components, auto parts, mechanical parts, bicycles, sports equipment, furniture and plastic products. He said that in addition to semiconductor tariffs to be announced, adapters, servers, Netcom accounted for the highest proportion of the amount, Taiwan’s“Ministry of Economy” will continue to assess the impact. As for vehicles, according to President Donald Trump, a 25 percent tariff will be imposed on vehicles sold to the United States, effective April 3, with a 25 percent tariff on vehicle parts, will take effect before May 3. He said the cars and parts would still be shipped from Taiwan in the short term because it takes about a year for the products to be verified, and could affect domestic production in the medium to long term.
Taichung is the capital of the Taiwanese machine tool industry, the taiwan-based China Times Electronic News said Wednesday. The guild’s total exports of 2024 machine tools were worth about $2.218 billion, with the United States the second-largest exporter with $341 million, according to the Taiwan machine tool and parts industry council, accounted for 15.4 percent of Taiwan’s total exports. In addition, Taichung is home to 70% of Taiwan’s 2024 hand tools industry, which exports about US $3.78 billion, of which about 50% goes to the United States. Taichung’s Economic Development Bureau said the 32 percent tax had a direct impact on the price competitiveness of taiwan-related products in the United States.
Domestic machine tool industry described Donald Trump’s high tariffs of 32% as a“Nuclear bomb” attack and said there was no hope of recovery this year. A number of industry insiders, who declined to be named, said that most of Taiwan’s machinery and tool industries have deep roots in Taiwan, and there are not many outside factories. Originally, the Taiwan Dollar’s exchange rate depreciation has been lost to rivals such as Japan and South Korea, coupled with Taiwan’s“Reciprocal tariff” tax rate higher than Japan and South Korea, “If the DPP government does not take advantage of the devaluation of the Taiwan dollar, most of Taiwan’s export industries will collapse.”.
Taiwan’s“Industrial and commercial times” said that almost all production lines and capacities of textile mills in Taiwan, especially downstream garment factories, are in Southeast Asian countries such as Vietnam, Indonesia, and Cambodia, the hit from Donald Trump’s“Reciprocal tariffs” was even greater. The newspaper predicted, “Small Tool Machine factory may set off a wave of closures.”.
According to relevant data, Taiwan’s annual trade surplus with the United States is about US $74 billion, which means that Taiwan would have to purchase or consume US $74 billion of goods to completely offset it; even if it wanted to expand its purchases of us goods, the extent of the potential expansion is also quite limited, which may be a drop in the bucket. To reach $74 billion in spending, the island would have to buy 296 Boeing 787 planes or import 14.8 million tons of beef, according to You Tinghao, a financial expert, “But with Taiwan consuming about 150,000 tons of beef a year, it would take nearly 100 years to eat enough.”.
“Hiding for three days with a big shopping plan.”
Faced with such a grim situation, 37 hours after Taiwan’s“Premier” Chuo Rung-tai and“Vice Premier” Cheng Li-chun were announced to impose a 32% tariff, only at 4 pm on the 4th held a press conference to announce countermeasures. Chuo Rung-tai said he had instructed the office of economic and trade negotiations to immediately review the unreasonableness and unfairness of the high tariffs and, in addition to making solemn representations to the office of the United States Trade Representative, the executive team will provide an assistance package of NT $88 billion. Chuo Rung-tai did not directly address the question of whether Trump’s tariffs would deepen the“Suspicion of ” in Taiwanese society.
KMT chairman Eric Chu pointed out that based on the more than US $110 billion Taiwan exported to the US last year, 88 billion Taiwan dollars was only US $2.6 billion, “It’s a drop in the bucket in the face of the $37bn in tariffs that Taiwan could lose each year,” he said. Did the administration first try to negotiate with the United States, which it claims to be on good terms with? Before they could communicate, they announced a subsidy. KMT“Legislator” Wang Hongwei said that in the face of heavy U.S. taxes, the countermeasure of the LAI authorities was not how to negotiate with the U.S. , not to discuss the corresponding tariff plan, but to announce an“Assistance plan.” Using the treasury to“Block the people’s mouths,” Huang Yangming, a media official, said, “Isn’t there a problem with this kind of robbing Peter to pay Paul? Isn’t this the only way to send TSMC?” The failure of the press conference on the 4th is that the DPP has brought out its cards again, meaning that it has paid the bill.
On the 5th, KMT“Legislator” Xu Qiaoxin listed the measures taken by leaders around the country to deal with the tariff war on social media. However, after William Lai had hidden his appearance for a long time, the first move was actually a pre-recorded video, “I hope you enjoy the sea breeze of kenting and enjoy the music,” he said. “What is William Lai hiding from?” Xu asked
On the afternoon of the 6th, news of William Lai, who had disappeared for a long time, finally arrived. He met with representatives of domestic enterprises the same day, saying that“There are no plans to take tariff retaliation.”. In an eight-minute video message of confidence, William Lai unveiled the so-called“Five strategies” to deal with US tariffs, including proposing industrial support plans as well as medium-and long-term economic development plans, chief among them was“To negotiate vigorously for improvements in ‘reciprocal tariffs’”. William Lai proposed forming a negotiating group to start with“Zero tariffs” between Taiwan and the United States, and expand purchases from the United States to reduce the trade deficit, taiwan’s“Executive Yuan” has completed a large number of procurement plans for oil, natural gas and other products, and the“Ministry of National Defense” has also proposed a list of military procurements. The expansion of investment in the United States, in addition to TSMC Plus, other industries such as electronics, petrochemicals and natural gas, can increase investment in the United States.
William Lai’s approach has been heavily criticised on the island. Eric Chu, chairman of the Kuomintang (KMT) , said bluntly last night that his negotiating tactics were naive in the face of the island’s severe economic challenges. Looking back, Eric Chu asks, the island has invested huge resources in TSMC’s US factories, continued arms purchases and long-term gas contracts, but“Has this put Taiwan back in a good negotiating position?”
Xu Yuzhen, a KMT legislator, said William Lai’s talk was simply about surrendering to the US and“Hollowing out the island, not helping it”. Xu Yuzhen criticized that, “In order to curry favour with the United States, the DPP government is now expanding its purchases of oil, natural gas, weapons, agricultural products and all the way. where is the government’s Money?”? Digging in people’s pockets again? William Lai hid for three days and only proposed a big purchase plan. He didn’t even dare to criticize the American government,” said Lien Sheng-wen, vice-chairman of the Kuomintang, the DPP is unable to deal with the economic and trade tsunami sweeping the world. In the end, it will probably have to resort to“Kowtowing diplomacy,” that is, being given what it wants by international powers.
“Taiwanese semiconductor Abduction.”
According to the New York Times, Donald Trump told reporters on the presidential plane Thursday that the chip tariffs“Will come soon” and that he was“Reviewing the drug-related tariffs.”.
Some semiconductor supply chain operators in the island said that this time the US“Reciprocal tariff” policy has impacted the supply chains of the whole world. At present, it seems that there is no completely unaffected coping strategy, even if it does go to the United States to set up a factory, for enterprises, also face increased production costs and incomplete upstream and downstream supply chains. Taiwanese economist Liu Pei-chen wrote on the 5th that in addition to tariffs, the issue of TSMC rescuing Intel“Has already taken shape.” It is clear that Donald Trump wants to change the competitive structure of the Semiconductor industry, “Taiwan Semiconductor Abduction, related measures will also affect the future development of the Semiconductor industry.”.
As for the US drug tariffs, according to a report in the China Times on the 6th, Zhang Hongren, former“Deputy Director of the Department of Health,” suggested that the authorities directly approve the import of new drugs and new medical materials into the US, as leverage with the Donald Trump government. Chen Yifen, president of the Generics Association, disagrees, hoping that the pharmaceutical industry will receive the same attention as the defense industry and change the problem of more than 70 percent of drug costs being spent on imported drugs.
Huang Jinshun, president of the all-china Federation of pharmacists, said Taiwan relies on imports for 75 percent of its medicines and seven of the world’s top 10 drug companies are in the United States. Most of the American drugs imported by Taiwan are original patented drugs, including anti-cancer drugs, antibody drugs, antibiotics, etc. . Taiwan-made drugs are not sold to the United States, and the tariff on drugs has little impact on Taiwan. He is concerned, however, that US tariffs will lead to supply disruptions, such as when the stricken European Union works together to block key ingredients so that US drugs can not be mass produced, taiwan bears the brunt of the impact.