Taiwan needs to address trade barriers after U.S. tariffs: Economists

Taipei, April 3 (CNA) The Taiwanese government needs to review its existing import duties on U.S. goods and practices to seek to remove the trade barriers that led to the high reciprocal tariff U.S. President Donald Trump slapped on the country, economists said.

In particular, the government needs to study a report recently published by the United States Trade Representative, which highlighted issues involving cars, as well as U.S. beef and pork products, Dachrahn Wu (吳大任), a professor at National Central University's Department of Economics, told CNA Thursday.

According to Wu, the reciprocal tariff of 32 percent Trump announced for Taiwan on Wednesday reflected Washington's view that Taipei has high trade barriers.

Taiwan still faces higher tariffs than Trump announced for Japan (24 percent) and South Korea (26 percent), despite the US$100 billion new investment Taiwan Semiconductor Manufacturing Co. (TSMC) announced in early March to expand its American operations, Wu pointed out.

Taiwan's economy is expected to be impacted as Taiwanese exporters have become more reliant on the U.S. market, Wu said.

In February, the U.S. for the first time in 24 years, became the top export destination of goods from Taiwan, accounting for 28.5 percent of total outbound sales, followed by China and Hong Kong (28.4 percent), Ministry of Finance data showed.

If exports to the U.S. account for a quarter of total exports this year, and exports contribute 60 percent of Taiwan's gross domestic product (GDP), Trump's tariff will impact 15-20 percent of Taiwan's GDP this year, Wu said.

The Ministry of Economic Affairs needs to pool resources and see whether steel or petrochemical industries or businesses in the semiconductor supply chain can expand investments in the U.S. to meet Trump's goal of boosting American manufacturing, according to Wu.

TSMC has said the chipmaker's investment in Taiwan will not be affected by its expansion in the U.S., so Wu said the government needs to think about industrial strategies once the semiconductor supply chain is transferred to the U.S.

The hit on domestic investment could also impact Taiwan's GDP, making growth of 3 percent more difficult, Wu said.

Meanwhile, Cathay United Bank chief economist Lin Chi-chao (林啟超) said the Ministry of Finance should consider lowering the 17.5 percent import tax on automobile and 30 percent tariff on health food as bargaining chips in talks with the U.S.

Lin said it is difficult to reduce the large trade deficit the U.S. has with Taiwan in a short period of time, but buying more U.S. natural gas and oil, increasing U.S. production and having a stronger Taiwan dollar should help.

The trade deficit the U.S. ran with Taiwan rose 54.6 percent to US$73.92 billion in 2024, the sixth largest among Washington's trading partners, according to data released by the International Trade Administration under the Ministry of Economic Affairs.

Taiwanese businesses that moved production to Vietnam and Thailand will also need to consider how to reposition themselves and the supply chain as the two countries are subject to reciprocal tariffs of 46 percent and 37 percent, respectively, Lin said.