20% tariff on Taiwan 'reasonable,' lower rate possible: U.S. experts

Washington, Aug. 1 (CNA) A 20 percent tariff announced by the Trump administration on imports from Taiwan appear "reasonable," compared with the rates imposed on other economies in the region, while it is possible Taiwan could see its rate cut through further negotiations with the United States, U.S. experts said Friday.

The White House has announced that Taiwanese exports to the U.S. will be subject to a 20 percent tariff starting Aug. 7.

The 20 percent levy, which was cut from the 32 percent U.S. President Donald Trump announced on April 2, matches those applied to Vietnam, Sri Lanka and Bangladesh. It is higher than the 15 percent rate for Japan, South Korea and the European Union, and the 19 percent rate for the Philippines.

The announcement came one day before the Aug. 1 deadline for countries to reach agreements with the United States on tariff reductions.

Speaking with CNA in an interview, Riley Walters, a senior fellow at the Hudson Institute, said the 20 percent is a "pretty reasonable" rate for Taiwan as the country did not have to "offer up hundreds of billions of dollars worth of new investment or agricultural purchases, or Boeing purchases, or the removal of non-tariff barriers."

Walters described Japan's 15 percent rate as a privilege the country "paid for," noting that Tokyo has pledged to invest US$550 billion in the U.S. market. He also pointed out that Taiwan's rate is only slightly higher than that of many of its regional competitors.

After the recent announcement of a 20 percent tariff, President Lai Ching-te (賴清德) said at a news conference that the U.S. remains open to further tariff discussions with Taiwan, as the two sides have yet to finalize their trade deal, calling the rate "provisional."

Jeffrey Kuo (郭哲瑋), a U.S.-based economic analyst, told CNA that Trump's tariff policies were a political-oriented announcement and he does not see any theory behind the tariffs.

"I think it is possible for Taiwan to see a cut from 20 percent if Taipei is able to offer more incentives to Washington and come up with more policies to benefit the U.S., such as a creation of more jobs through more investments in U.S. markets," Kuo said.

"Taiwan has to make a concession for a tariff cut," Kuo added.

Walters said it will be challenging for Taiwan to secure a lower tariff, because "there's really no telling how low this (Trump) administration wants to go on tariffs."

Walters added that a lower tariff will depend on the trajectory of the trade deficit the U.S. has with Taiwan, adding if the trade deficit shows signs of trending lower, Taipei could seek a lower tariff rate.

Taiwan is the sixth-largest contributor to the U.S. trade deficit, with its trade surplus with the U.S. increasing from US$47.8 billion in 2023 to US$73.9 billion in 2024.

Alternatively, the Hudson Institute scholar said Taiwan could promise new investments as leverage.

However, "there is a level of this administration that just wants to see higher tariffs, and there's no negotiating around that," Walters added.

With Trump advocating "Made in U.S.A,", his administration has urged the manufacturing sector to return to American soil by imposing tariffs on certain industries such as 25 percent on the auto industry and 50 percent on steel and aluminum goods.

Asked about a potential tariff on semiconductor imports, Walters said that the U.S. is likely to impose a minimum rate of 15 percent, but there could be exclusions, as occasionally seen in the Trump administration's tariff arrangements over the past six months.

Walters said that companies should try to seek an exclusion on semiconductors if a levy is imposed. "Maybe they'll be lucky enough for their products to avoid such a high tariff rate," he said.