Taiwan Braces for Impact: Premier Outlines Strategy to Counter U.S. Tariffs

Government Unveils Multi-Billion Dollar Plan to Mitigate the Effects of Potential U.S. Import Duties

Taipei, Taiwan – The government of Taiwan is actively preparing for various scenarios concerning potential U.S. import duties, with Premier Cho Jung-tai (卓榮泰) announcing a comprehensive response plan that includes a significant financial commitment.

Premier Cho revealed on Friday that the government views the 32% import duty announced by the U.S. as an "extremely high" worst-case scenario. To address this, the administration has proposed an NT$88 billion (US$2.72 billion) support package designed to cushion the impact on Taiwan's economy over a four-year period. This plan is contingent on legislative approval, with funding allocated through a special budget.

The government's response strategy considers three possible tariff rate scenarios. The 32% duty, described as "extremely high," presents the most significant challenge. This rate, which would affect a range of Taiwanese exports, is higher than duties set for other major trading partners such as Japan (24%) and South Korea (25%).

If the 32% tariff were to be implemented, Taiwan anticipates a minimum 21% drop in the value of goods shipped to the United States, due to the increased cost for American buyers. To remain competitive, Taiwanese businesses may need to consider relocating manufacturing operations outside of Taiwan.

The premier highlighted that the manufacturing sector could face a 5% decline in production value, potentially putting 125,000 jobs at risk. Furthermore, the agricultural sector is also vulnerable. Cho estimated the added cost of exporting products to the U.S. at NT$320 million for orchids, NT$460 million for tilapia, and NT$110 million for mahi mahi.

In lower-tariff scenarios, the government estimates a more manageable impact. With U.S. tariffs between 10-20%, the four-year support plan would cost NT$36.1 billion. If the tariffs fall in the 20-30% range, the estimated cost rises to NT$57.6 billion, with a greater risk to sectors such as machinery, electronics, agriculture, and fishing.

Alongside the financial support, the government will actively engage in trade negotiations with the U.S., led by Vice Premier Cheng Li-chiun (鄭麗君), addressing U.S. concerns on trade barriers. The government also plans to tackle trade issues raised by the U.S., including export controls on advanced technology and products from China that are potentially "dumped" in the U.S. market through third countries like Taiwan and Vietnam. Given the U.S.'s 145% tariffs on China, Taiwan also intends to prevent China from "dumping" cheap products in markets outside the U.S., including Taiwan.