U.S. tariffs, rising currency could hit Taiwan's machinery industry: TAMI

Taipei, Aug. 11 (CNA) The 20 percent baseline tariff imposed by the United States on goods from Taiwan, combined with an appreciating Taiwan dollar, could significantly hurt the nation's machinery industry, the Taiwan Association of Machinery Industry (TAMI) said Monday.

TAMI said that starting Aug. 7, Washington began implementing reciprocal tariffs, setting a provisional 20 percent baseline for Taiwan -- higher than the 15 percent applied to Japan and South Korea.

After adding the new 20 percent rate to existing most favored nation (MFN) duties and other trade remedy tariffs, Taiwanese machinery products shipped to the U.S. will face an effective tariff about 10 percent higher than those from Japan and South Korea, the association said.

When factoring in the Taiwan dollar's sharp appreciation since April, the effective price gap with Japan and South Korea widens to about 20 percent, which TAMI warned could severely undermine the competitiveness of Taiwan's machinery exports.

Previously, the average tariff on Taiwanese machinery exports to the U.S. was about 5 percent, while Japanese and Korean products often enjoyed zero tariffs, TAMI noted.

The association said the stronger Taiwan dollar has an even greater impact than the tariffs. From 2021 to July 31 this year, the Taiwan dollar depreciated only 4.6 percent, compared with declines of 46.2 percent for the Japanese yen and 28 percent for the Korean won.

Taiwan's traditional price advantage -- with equipment priced 20-30 percent lower than Japanese products -- has effectively disappeared, especially for machine tool exports, leading to a sharp drop in orders, according to TAMI.

Given the higher U.S. tariff rate for Taiwan compared with key competitors and the currency's effect on export competitiveness, TAMI urged the government to take steps to safeguard the industry's position in global markets.

Separately, TAMI reported Monday in a financial statement that Taiwan's machine tool exports in July reached US$2.79 billion in July, up 13.4 percent from a year ago, marking six consecutive months of growth.

From January to July, machinery exports reached US$17.71 billion, an annual increase of 6.5 percent. In Taiwan dollar terms, the total was NT$558.17 billion, up 5.1 percent.

The Taiwan dollar's appreciation this year has eroded both the real growth of exports and the actual income of companies, TAMI said. The U.S. and China remain Taiwan's two largest export markets, with shipments to China rising 3.8 percent year-on-year to US$4.07 billion in the first seven months, and exports to the U.S. increasing 16.1 percent to US$4.72 billion.