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U.S.-imposed 20% tariff is 'not the worst': Scholar

08/01/2025 12:20 PM
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CNA file photo
CNA file photo

Taipei, Aug. 1 (CNA) The 20 percent tariff imposed by the United States on Taiwanese exports is "not the worst," because securing a lower rate would have required Taiwan to pay a steep price, Tunghai University economist Darson Chiu (邱達生) said Friday.

Speaking with CNA, Chiu said the 20 percent tariff was higher than expected and far from ideal, but not the worst outcome, as Taiwan's negotiating team held firm on its bottom line to avoid paying a much higher price.

Chiu said that otherwise, Taipei could have reached an agreement with Washington by the Aug. 1 deadline and secured a 15 percent tariff -- on par with Japan and South Korea, which are Taiwan's direct competitors in the global market.

U.S. President Donald Trump's tariff plan was first unveiled on April 2 as part of a sweeping package that included a proposed 32 percent duty on Taiwanese goods.

Implementation was initially delayed by 90 days, pushing the deadline to July 9, and later extended to Aug. 1 to give Washington's trading partners more time to negotiate lower tariffs.

According to the White House, countries that have reached "meaningful" trade and security agreements with the U.S. include the European Union, Japan, the United Kingdom, South Korea, the Philippines, Indonesia and Vietnam -- but not Taiwan.

"Some countries, through negotiations, have offered terms that, in the President's judgment, do not sufficiently address the national emergency he declared on April 2," the White House said in a statement.

While the government has not disclosed details about its negotiations with the U.S., Chiu said that if Taiwan had agreed to invest US$400 billion in the U.S. to secure a 15 percent tariff -- as the market had anticipated -- the investment would amount to nearly 50 percent of Taiwan's GDP last year and could undermine the country's long-term economic development.

Japan has agreed to invest US$550 billion in the U.S. and open its agricultural market, including rice, to American exporters, while South Korea has pledged US$350 billion in investment.

Chiu said that while a 15 percent tariff would have helped Taiwan maintain its competitive edge against Japan and South Korea, it might have come at a cost elsewhere.

As a democracy, Taiwan would need Legislative Yuan approval for any trade agreement with the U.S., and building domestic consensus would pose a major challenge for the government, he said.

Chiu added that because Taiwan's position in the talks was to protect national and industrial interests and ensure food security and public health, he believed the government had carefully assessed the situation and chose not to make excessive concessions for now, opting instead to pursue further negotiations in Taiwan's interest.

Following the announcement of the 20 percent tariff, the Taiex, the weighted index on the Taiwan Stock Exchange, plunged as much as 374.25 points shortly after the market opened before recovering part of its losses.

As of 11:10 a.m., the index was down 112.11 points, or 0.48 percent, at 23,430.41.

(By Pan Tzu-yu and Frances Huang)

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