Taiwan to lift import caps on U.S.-spec vehicles, remove tariffs on U.S. cars

Taipei, Feb. 13 (CNA) Taiwan will lift its quotas on vehicles manufactured in accordance with U.S. regulations and will eliminate tariffs on sedans imported from the United States, under the terms of a bilateral trade deal signed in Washington on Thursday.

Vehicles conforming to the Federal Motor Vehicle Safety Standards (FMVSS) will now be exempt from import quotas, Taiwan's Cabinet said Friday. However, it said, importers must submit documentation issued by the original U.S. manufacturer and obtain a safety approval certificate from the Ministry of Transportation and Communications.

Additionally, importers must apply to the ministries of Economic Affairs and the Environment for three other certificates pertaining to energy consumption, emissions and noise levels, the Cabinet said.

The relaxation of import quotas is part of the Agreement on Reciprocal Trade signed by Taipei and Washington to open the Taiwanese market wider to American products, given that Taiwan had a US$73.9 billion trade deficit with the U.S. in 2024, the sixth largest among the U.S. trade partners.

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The import quota -- defined by the number of units of the same model a single importer may apply for annually -- had shrunk from 2,000 in 2008 to just 75 in 2023, effectively disincentivizing the importation of U.S. vehicles to Taiwan.

In addition to removing quantitative restrictions on U.S. motor vehicles that conform to safety standards, the pact outlines specific staging categories to lower levies on other vehicle types to varying degrees.

Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said Wednesday that lifting the 17.5 percent tariff on vehicles imported from the U.S. is expected to reduce the total tax burden on consumers by about 10 percent, accounting for commodity, business and luxury taxes.

Based on projections from a think-tank model, Kung said, lowering tariffs on U.S.-made vehicles is estimated to affect domestic automobile output by about 1.94 percent, or roughly NT$4 billion (US$12.7 million) per year. The change is likely to impact European and Japanese car manufacturers more than Taiwanese automakers, he said.

Wu Jui-hung (吳睿弘), executive director of PG Union Corp. Taiwan, told CNA on Friday that the trade deal will not have any significant impact on domestic vehicle manufacturers' mainstream models over the next three years.

He said U.S.-spec vehicles are usually priced at around US$40,000 (NT$1.26 million) in the U.S. and are subject to a 25 percent commodity tax in Taiwan. This "gives imported vehicles little edge" compared with mainstream models produced by domestic carmakers, which are mostly priced at NT$800,000 to NT$1.1 million, Wu said.

While local consumers will appreciate having more options, in the long run, the market share of imported vehicles may expand in Taiwan from 50 percent to nearly 60 percent, he said.

In 2025, imported vehicles held a 48.7 percent share of the Taiwan market, with sales totaling 202,000 units, according to Ministry of Economic Affairs data. Meanwhile, the market share for domestically produced vehicles has steadily declined, dropping from 63.2 percent in 2015 to 51.3 percent in 2025, the data showed.

Japan remained the primary source of imports in 2025, accounting for 42 percent, followed by Germany with 26 percent, and the U.S. and South Korea 6 percent each. Imports from the U.S. totaled 12,243 units -- mainly luxury electric vehicles and internal combustion engine models -- with Tesla, Toyota, Ford, Mercedes-Benz and BMW being the most popular brands, according to the data.