ANALYSIS/Tariffs, defense demands keys for Taiwan in Trump's new term: Experts

Taipei, Jan. 21 (CNA) Now that Donald Trump has begun a new term as America's president, analysts highlighted his policies on tariffs, trade, and defense and general disdain for allies as things to watch for Taiwan in the coming year.

Trump, who assumed office on Monday (Washington time) for his second nonconsecutive term, has said he would impose tariffs "indiscriminately" on both allies and non-allies, said Yen Chen-shen (嚴震生), a research fellow at the Institute of International Relations at National Chengchi University.

Whether he follows through on these pledges and their potential impact on Taiwan could be a cause for concern in the short term in relations between Taipei and Washington, Yen added.

"His approach, let's put it this way, shows no leniency toward allies," Yen told CNA, pointing to Trump's campaign promises to impose a 10 percent tariff on all global imports and a significantly higher 60 percent tariff on Chinese goods entering the United States.

In late November 2024, he promised to implement a 25 percent tariff on imports from Canada and Mexico upon taking office, sparking concerns and criticism from both nations, which have a free trade agreement with the U.S.

Yen said it was uncertain whether Trump would fully implement his economic sanctions, but he took note of the 10 to 25 percent tariffs Trump imposed in his first term from 2017 to 2021 on steel and aluminum derivatives from Taiwan and other countries.

Taiwan's National Development Council head Liu Chin-ching (劉鏡清) has said the 10 percent tariff, if implemented, would not have a significant impact on Taiwan.

According to Liu, the possible U.S. measures could instead encourage Taiwanese companies operating in China to relocate in order to avoid the much higher tariffs on Chinese exports.

On the other hand, Wen-Ti Sung (宋文笛), a nonresident fellow with the Atlantic Council's Global China Hub, expressed less concern over what he described as "primarily electoral language," casting doubt on whether those tariff pledges would materialize consistently across the board.

Whether the new U.S. government will create exemption clauses for partnered countries, including Taiwan, will "give us an indicator or two about how high Taiwan is on the administration's [list of priorities]," he told CNA.

Also on Sung's radar will be negotiations between the two sides on the U.S.-Taiwan Initiative on 21st Century Trade -- a framework covering 11 trade issues that Taipei hopes will eventually morph into a free trade agreement.

"I'll be keenly watching for whether there's still progress [on bilateral negotiations under the trade initiative]," particularly the "harder-going" trade issues, he said.

He was likely referring to thorny labor, environmental and agricultural issues on which talks began in April 2024 under the previous Joe Biden administration.

They were started following the signing of a first agreement under the trade initiative, which focused on streamlining customs clearance rules and creating other conveniences for smoother trade.

Sung acknowledged, however, that he was "not so optimistic" about significant breakthroughs in bilateral economic ties moving forward, arguing that Trump's "protectionist" policy might conflict with Taiwan's heavy reliance on global trade.

Another issue that analysts and observers are eager to monitor is whether the Trump administration will push Taiwan to increase its defense spending to well above the NT$647 billion (US$19.76 billion) pledged by Taiwan for fiscal 2025, which would account for 2.45 percent of Taiwan's GDP.

During his election campaign, Trump criticized Taiwan for not doing enough to defend itself against potential Chinese aggression, suggesting that Taiwan should pay the U.S. for protection from Beijing.

In an interview with The Washington Post in September 2024, Trump said Taiwan should increase its defense budget to 10 percent of its national income, a figure far higher than Poland's 4.12 percent for 2024, the highest among NATO members, or the U.S.' 3.38 percent.

NCCU's Yen cautioned, however, that there was no knowing whether the U.S. president was serious about his words or he was just trying to "intimidate" Taiwan.

"If we respond to [Trump's urges for increased spending], it does not guarantee he will help us...If we do not, it will probably give him a convenient excuse to avoid intervening in the event of a conflict across the Taiwan Strait," he said.

Sung questioned whether Trump would follow through on such a demand made during his election campaign.

Instead, he suggested that Taiwan continue its current policy of gradually increasing defense budgets, as it would "show good faith" to the new U.S. administration and demonstrate that its "assistance is genuinely helping Taiwan to stand on its own two feet."

At the same time, he said, it also serves Taiwan's need to build up its own defense capabilities in the face of growing military threats from China.