Taiwan's President Charts a Course: No Retaliatory Tariffs Against the US

President William Lai Unveils Strategies to Navigate US Trade Levies, Focusing on Investment and Cooperation.

In a decisive move, President William Lai (賴清德) has declared that Taiwan will not impose reciprocal tariffs in response to potential US levies. He unveiled a comprehensive five-pronged strategy designed to mitigate the impact of US trade policies and foster stronger economic ties between the two nations.

Following consultations with administrative, national security officials, and industry representatives, President Lai addressed the situation in a video released last night. The focus is clearly on reinforcing a robust economic partnership with the United States.

“Taiwanese exports to the US amounted to US$111.4 billion, or 23.4 percent of total exports, last year, while the other more than 75 percent of products were exported to other countries around the world,” he noted, emphasizing the significance of the US market for Taiwan.

“Of all exports to the US, competitive products, including information and communications [IT] products and electronic components, accounted for 65.4 percent, a figure that shows Taiwan’s economy is resilient,” Lai said, highlighting the strength of Taiwan's export sector. He underscored the importance of public-private cooperation in easing the effects of the trade measures.

Five Strategic Pillars:

The government's approach will be structured around five core strategies, aiming to bolster industrial cooperation and safeguard domestic industries:

1. Negotiation and Dialogue: Actively seeking more favorable import duties from the US government, including exploring a "zero-for-zero" tariff approach similar to the US-Mexico-Canada Agreement.
2. Strategic Procurement: Expanding procurement from the US to reduce the US trade deficit with Taiwan and encouraging private investments in the US to deepen industrial cooperation.
3. Investment and Job Creation: Highlighting the US$100 billion in Taiwanese investments in the US, which have created approximately 400,000 jobs. Further incentivizing investments from key sectors like electronics, IT, and oil and gas alongside Taiwan Semiconductor Manufacturing Co (台積電).
4. Task Force and Reciprocity: Establishing a dedicated task force to promote Taiwanese investments in the US. The government is also requesting the US to reciprocate by setting up a team for US investments in Taiwan to tighten bilateral economic and trade cooperation.
5. Trade Facilitation: Facilitating negotiations by eliminating non-tariff trade barriers, streamlining regulations on high-tech exports, and combatting illicit transshipments.
6. Support for Businesses: Implementing programs designed to support businesses, with an emphasis on supporting traditional industries and small and medium-sized businesses, to innovate, upgrade, or transform.
7. Market Diversification: Developing medium and long-term economic development road maps and diversifying overseas markets by collaborating with allied countries to integrate upstream, midstream, and downstream industrial supply chains.
8. Strategic Alignment: Calibrating the national economic development strategy to prioritize Taiwan-US industrial cooperation, while leveraging newly arranged international industrial chains to penetrate US markets and market Taiwanese products globally.
9. Industry Engagement: Inviting industry input to tailor policies to businesses’ needs and alleviate the effects of the US’ “reciprocal” tariffs.

President Lai's approach underscores Taiwan's commitment to a strong and cooperative economic relationship with the United States, emphasizing investment, innovation, and strategic market diversification to navigate the evolving global trade landscape.