ANALYSIS/Taiwan needs to act fast in response to Trump's tariff policy: Expert

Washington, Feb. 21 (CNA) Taiwan needs to urgently focus on announcing policies and investment plans in support of U.S. President Donald Trump's administration, instead of hoping to change the American president's view on the semiconductor industry and trade, a defense and security expert has told CNA.

Tariffs are at the core of Trump's plans to change the nature of bilateral and multilateral trade relationships and accelerate inbound investment into the United States, Rupert Hammond-Chambers told CNA in an interview via a video link on Thursday.

In recent days, the Trump administration has threatened to impose tariffs of up to 100 percent on chip imports from Taiwan, and the president has repeatedly accused Taiwan of stealing the U.S. semiconductor industry.

The growing trade imbalance between Taiwan and the U.S. has put Taiwan "in the crosshairs of the Trump administration," said Hammond-Chambers, who also serves as president of the U.S.-Taiwan Business Council.

Data released by the U.S. Census Bureau and the U.S. Bureau of Economic Analysis on Feb. 5 showed that the U.S. posted a record-high trade deficit of US$73.9 billion in 2024 with Taiwan, the fifth highest among its trade partners.

The highest trade deficit the U.S. recorded in 2024 was with Mexico, at US$171.8 billion, followed by Vietnam (US$123.5 billion) and Ireland (US$86.7 billion), the data showed.

Commenting on President Lai Ching-te's (賴清德) recent proposal to further encourage Taiwanese businesses to invest in the U.S. and increase procurement of U.S. products to "promote balanced trade" between the two sides, Hammond-Chambers called it a "smart decision."

"Forty percent or thereabouts of Taiwan outbound investment is coming already to the U.S.," Hammond-Chambers also said.

Lai had said his administration would continue communicating and negotiating with the U.S. to enhance mutual understanding, when he announced the proposal in Taipei on Feb. 14.

But Hammond-Chambers told CNA: "I don't believe that the Trump administration is interested in that approach, whether it be with Taiwan or the Europeans or anybody. They are making it clear that they're prepared to do these tariffs ... I don't think hoping that Taiwan can persuade President Trump and his colleagues of a different way to think about the semiconductor industry is a realistic approach to the bilateral relationship right now."

He added: "I understand that there's some frustration around it. I would not personalize it towards Taiwan specifically. The Trump administration is doing it to everybody."

Hammond-Chambers also pointed to the legislation on Capitol Hill to end double taxation for the U.S. and Taiwan, which he said "was conceived as part of an effort to increase the pace of Taiwanese investment into the United States, specifically in the semiconductor industry."

In addition, Hammond-Chambers said the Trump administration would like to see Taiwan's defense spending to be more in line with countries that also face existential threats, such as South Korea and Israel.

It is difficult for Taiwan to increase its defense spending to 5 percent of the country's gross domestic product (GDP) right away, Hammond-Chambers said.

However, President Lai can demonstrate good faith by moving it up a half percentage point in one year, which is a very significant increase, particularly for an economy as large as Taiwan's, he added.

"The important thing is to telegraph intent and seriousness," Hammond-Chambers said.

"If they're going to do a special defense budget, do it soon. Do it as soon as is possible. Make some positive noise that will get a good response," he said.

Lai has recently repeated pledges to propose a special budget plan to increase Taiwan's defense spending to over 3 percent of GDP, compared to the 2 to 2.5 percent during former President Tsai Ing-wen's (蔡英文) eight years in office which began in 2016.