ANALYSIS/Taiwan could dodge worst of Trump's new tariff threat: Scholars

Washington, Feb. 13 (CNA) Two scholars said that Taiwan's tech sector would likely avoid the worst effects if U.S. President Donald Trump follows through on his latest tariff threat, made Thursday in Washington, D.C., though the full impact is unclear due to no concrete details.

"Whatever countries charge the United States of America, we will charge them. No more, no less," the president said as he announced plans to hit exports from countries that he said have trade policies that are unfair to the U.S.

Trump's Secretary of Commerce nominee Howard Lutnick said that individual country reviews will be completed by the beginning of April. A White House official told the media that action could be implemented within a few weeks.

Chiang Min-hua (江敏華), an adjunct fellow at the East-West Center in Washington D.C., said that it is hard to gauge the impact of the tariffs because it is unclear how they will be calculated.

Were a "product-to-product" tariff system to be implemented, Chiang said if Taiwan imposes tariffs on U.S. ICT products, the U.S. would implement the same levy.

Chiang added that an "average value" tariff system would lead to the U.S. applying a flat rate to all Taiwanese imports, based on the average tariff Taiwan imposes on American goods.

Trump's tariff policy aligns with the promises made during his presidential campaign to cut taxes and reduce the federal government's budget deficit, using revenue from tariffs to offset the shortfall, Chiang said.

However, tariffs would likely drive up prices and shift the government's revenue source "from taxpayers to consumers," she added.

In addition, the reciprocal tariffs, if imposed, would result in the U.S. violating the World Trade Organization's Information Technology Agreement, Chiang said.

The U.S. president, however, has shown little regard for multilateral organizations.

Chiang explained that even if Trump is determined to impose tariffs on Taiwanese chips, the impact on Taiwan's chipmakers would be limited.

Taiwan directly exports only a small quantity of semiconductors to the U.S., with most of them being assembled into finished products in other Asian countries before being shipped to the U.S., she said.

"What is more concerning is the potential U.S. pressure on Taiwan to transfer its semiconductor manufacturing technology or factories to America."

However, such a shift in production would be difficult to accomplish unless the U.S. government is willing to provide significant subsidies, as building a semiconductor fab requires several years and substantial investment, Chiang said.

Meanwhile, Jeffrey Kuo (郭哲瑋), an economics lecturer at George Washington University, noted that Taiwan exports a wide range of products to the U.S., but that the majority are related to machinery and electronic equipment.

Kuo said that because Taiwan imposes very few tariffs on imports of machinery and electronic components from the U.S., a reciprocal tariff policy would have a limited impact.

Furthermore, Kuo said such tariffs would likely "not align with U.S. interests and may even harm consumers."

He elaborated that electronics components and related products imported to the U.S. from Taiwan are crucial to the global supply chain, unlike Mexican agricultural products or Canadian pharmaceuticals, which American consumers directly purchase.

Tariffs on Taiwanese products would therefore affect American brands and manufacturers that produce electronics and that the extra costs would likely be passed onto consumers, he said.

Kuo further said that another key feature of Taiwan's exports to the U.S. is that there are few alternatives.

A prime example, he said, is the demand from Tesla and Apple for chips produced by Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker.