Tariff Troubles: Taiwan's Drug Sector Braces for Impact from US Trade Moves

Local Manufacturers Face Uncertainty as US Tariffs and Global Supply Chains Shift.

Taipei, April 5 – The shadow of potential U.S. tariffs looms over Taiwan's pharmaceutical and health supplement industries, sparking concern among industry leaders. The proposed tariffs, targeting imported semiconductors and pharmaceuticals, have initiated a period of anxious anticipation, as described by industry insiders on Saturday.

Chen Wei-jen (陳威仁), founding chairman of the Taiwan Functional Food Industry Association, highlighted the potential ramifications. He stated that the expansion of tariffs to include health supplements could severely impact local manufacturers, many of whom depend on outsourcing agreements for their operations.

Chen (陳威仁) underscored the critical issue of Taiwan's existing import tariff rates on health supplements, which currently stand at 30 percent. Discussions regarding a phased reduction to 20 percent over the next five years are underway, adding another layer of complexity.

However, Chen (陳威仁) also cautioned that decreasing these tariffs could inadvertently diminish the demand for Taiwan's outsourcing services from foreign companies. This could potentially harm the local production landscape.

Chen (陳威仁) further explained that the COVID-19 pandemic led to significant global supply chain disruptions. This resulted in developed nations seeking manufacturing partnerships with Taiwanese companies to supply their local markets with health supplements.

He expressed concern that with a tariff reduction in Taiwan and the ongoing recovery of the global supply chain, foreign firms might relocate their outsourcing activities to countries offering lower production costs, therefore eroding Taiwan's competitiveness in the health supplement sector.

Simultaneously, an unnamed senior representative from Taiwan's pharmaceutical industry suggested that the immediate impact of the proposed tariffs on the drug manufacturing sector itself might be limited. This is due to the fact that only approximately 10 percent of Taiwan's pharmaceutical exports are directed towards the U.S. market.