Taiwan adjusts supply chains amid U.S. tariff talks; political risks loom: Experts

Taipei, May 10 (CNA) Taiwan businesses have adjusted their supply chain strategies as trade negotiations continue between the United States and various other countries, while there is a risk that Taiwan could become a bargaining chip in the current China-U.S. talks, Taiwanese experts said Saturday.

One month after U.S. President Donald Trump announced a 90-day pause on "reciprocal" tariffs on most countries, with the exception of China, experts in the fields of business and international relations gathered at a seminar in Taipei to discuss the potential fallout of the policy and its impact on Taiwan.

To satisfy the U.S.

"Of course, on the surface, we must stand with the U.S., and when Trump asks us to invest in the U.S., we have no choice but to comply," said Owen Lin (林宏文), a veteran journalist and an expert on the semiconductor industry.

He was referring to the pressure Trump has been putting on Taiwan companies, particularly those in the high-tech sectors, to expand their manufacturing presence in the U.S., as part of his strategy to boost domestic production and strengthen economic security.

Citing a top manager at a major Taiwanese tech company, Lin said that such companies are likely, however, to set up only a basic assembly line in the U.S. "just to tighten a few screws" and keep the American government satisfied.

TSMC's 'strategic ambiguity'

In the case of Taiwan Semiconductor Manufacturing Co. (TSMC), Lin noted that the company plans to expand its investment in the U.S. by US$100 billion to build three new fabrication plants and two new advanced packaging plants in Arizona, in addition to the three fabs it already has in the country.

"Everyone knows it took four years to build the first fab [in Arizona]," Lin said. "Now they've announced the recent groundbreaking for the third, but by the time it's completed, Trump will likely have finished his term."

TSMC has maintained "strategic ambiguity" on the other fabs that have yet to be built, Lin said, adding that all six fabs are unlikely to be completed within the next 10 years.

When asked to expand on the "strategic ambiguity" concept, Lin said he was not suggesting that TSMC was deliberately delaying construction, but he was taking into consideration the practical factors at play, such as the U.S.' lack of a strong industrial foundation to facilitate that type of production.

He also pointed out that in a press release on March 4, TSMC did not specify when the fabs would be completed but instead highlighted the number of jobs they could create in the U.S. over the next decade.

Taiwan a potential bargaining chip

Meanwhile, Stephen Tan (譚耀南), managing director of the International Policy Advisory Group and an expert on international relations, said that the Taiwan issue might be put on the table during the tariff talks between the U.S. and China in Switzerland this weekend, in light of Trump's recent remarks.

On Friday, Trump posted on social media that the U.S.' current 145 percent tariffs on Chinese imports may be lowered to 80 percent, which "seems right."

In a radio interview on Wednesday, Trump also said that as "part of the negotiation" with China, it would be a "very good idea" to raise the case of Hong Kong media tycoon and activist Jimmy Lai, who has been imprisoned in Hong Kong since December 2020.

Tan drew attention to those two comments by Trump, saying they were an indicator that the talks might not be limited to trade.

"I don't remember the last time Trump showed concern for Jimmy Lai or human rights in Hong Kong," Tan said. "In fact, I don't think I've ever had the impression that he did."

Tan said Trump is raising issues like human rights and drug trafficking before the talks with China, in an attempt to strengthen the bargaining position of the American delegation, which is being led by Treasury Secretary Scott Bessent.

On the Chinese side, Vice Premier He Lifeng (何立峰), a close economic advisor to President Xi Jinping (習近平), is leading the delegation, Tan noted.

"Don't assume that just because the delegations are led by Bessent and He, the talks will only focus on trade," Tan said.

Each side will likely raise other matters, including the Taiwan issue, if they think it is advantageous and aligns with their interests, he added.

Tan said both Trump and Xi seem to have considerable flexibility on trade matters, but it remains to be seen how the U.S. would respond if the Chinese negotiators bring up the Taiwan issue.

"Even if the Chinese side wants to raise the issue, the U.S. side may not be so quick to dive into the deeper waters of geopolitical topics, beyond trade," he said.