US Slaps 32 Percent Tariffs on Taiwan Exports Amid Trade Tensions Sparking Economic Uncertainty and Negotiations
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US Slaps 32 Percent Tariffs on Taiwan Exports Amid Trade Tensions Sparking Economic Uncertainty and Negotiations
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In early April, President Trump announced a sweeping 32 percent tariff on all imports from Taiwan, a move that immediately triggered shockwaves through Taiwan’s government and industries. Taiwan’s Executive Yuan quickly labeled the tariff rate as unfair and questioned the US administration’s opaque methodology, highlighting the robust export growth and US demand for Taiwan’s semiconductors and AI products. According to Taiwan’s Ministry of Economic Affairs, as of March, the US market now accounts for more than a quarter of all Taiwanese exports, making America Taiwan’s largest export destination. Critical sectors affected range from servers and network equipment, machinery, and auto parts, to petrochemicals and plastics. Many of these are small-to-medium-sized manufacturers, whose lifeblood is exports to the United States. Some electronic products and telecom equipment that were previously protected under the WTO’s Information Technology Agreement are now subject to at least a 10 percent tariff, throwing as much as NT$1.5 trillion in output into uncertainty.
Following the initial uproar, the Trump administration reduced the tariff to 10 percent for a 90-day period, which will end on July 9, 2025, to allow for trade negotiations. However, the threat of reinstating the 32 percent rate or even targeting semiconductors with new duties looms large. As reported by Taiwan Insight, the US rationale is “reciprocal tariffs,” targeting countries like Taiwan that have large trade surpluses with the United States. Last year, Taiwan’s trade surplus with the US reached $73.9 billion, the sixth largest globally, and that made Taipei a target.
There’s major concern in Taiwan’s economic forecasting circles. The Chung-Hua Institution for Economic Research now predicts that Taiwan’s GDP growth may drop to just 1.66 percent this year if the tariffs rise beyond the temporary 10 percent. Under a more optimistic scenario where tariffs remain at 10 percent, growth could approach 2.85 percent. But if global conditions deteriorate, growth could all but stall. Businesses are in wait-and-see mode, and trade negotiators in Taipei are bracing for tough conversations with Washington. Some experts believe Taiwan may be fortunate if it can negotiate the rate down to 15-20 percent, given Trump’s ‘America First’ objectives and the desire to bring manufacturing jobs back to US soil.
In the meantime, talks are ongoing, and Taiwan’s President William Lai has publicly pushed for a fairer deal, laying out proposals for deeper trade ties in international media. There are ongoing exemptions for semiconductors and some electronics, but their future remains uncertain. The new tariff landscape is already sending ripples through global markets and Taiwan’s stock exchange, raising the stakes for both sides.
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