Ex-White House official advises Taiwan to face high tariff reality

Washington, Aug. 17 (CNA) Taiwan needs to face the new reality of higher U.S. tariffs in the coming years, a former White House official said Sunday, noting that the Trump administration treats trade and strategic policy separately, even while considering Taipei a key strategic partner.

Alexander Gray, who previously served as deputy assistant to the president and chief of staff of the National Security Council at the White House during Trump's first presidency, made the comments during an interview with CNA.

Gray recently concluded a trip to Taiwan where he spoke at the annual Ketagalan Forum -- Indo-Pacific Security Dialogue in Taipei earlier this month.

Asked about some of the topics he raised during the Taipei trip, Gray told CNA that many of his conversations in Taiwan were fundamentally hearing people "complain about President Trump's trade policy."

"And this [higher tariff] is not going to change. And I don't think the next president, Republican or Democrat, is going to change it either," he said.

"That's a new reality that we have to face ... and if we keep arguing the premise, we're wasting time and we're distracting ourselves," he added.

According to the former U.S. official, Trump has made it very clear that he views trade policy "as separate from strategic policy."

"He [Trump] thinks we can have a great strategic relationship while having very real concerns about a country's trade policy."

Gray, a member of the 2016 presidential transition team at the Department of State, revealed that during his first term, Trump had sought to impose higher tariffs on several countries but was stopped by the secretary of defense, secretary of state, and national security advisor, who cited concerns over strategic partnerships.

"None of that's happening anymore, because there's an understanding in this administration that these are two separate issues," and he said Taiwan should embrace the new reality.

Gray suggested that Taiwan could take several steps to appeal to Trump on bilateral trade, including increasing investments and making commitments to "doing things in the U.S. that create jobs" as a way to secure lower tariffs.

The United States imposed a baseline tariff of 20 percent on goods made in Taiwan that took effect on Aug. 7, higher than the 15 percent tariffs imposed on goods made in Japan and South Korea, raising concern over the tariff's impact on Taiwan's economy.

After the announcement of a 20 percent tariff, President Lai Ching-te (賴清德) said the U.S. remains open to further tariff discussions with Taiwan, as the two sides have yet to finalize their trade deal, calling the rate "provisional."

Taiwan not a bargaining chip

Gray also told CNA that he believes Trump will never use Taiwan as a bargaining chip when engaging with Chinese President Xi Jinping (習近平).

"Taiwan has been a core national interest of the United States. Taiwan's autonomy and sovereignty have been a core interest of ours for decades.

"I don't see any reason why President Trump would ever, for the first time in his eight years as president, compromise on a core interest of the United States."

However, he expressed concern that due to domestic politics, Taiwan has not shown enough resolution to increase its defense spending, referring to the fact that opposition parties in Taiwan have tried to cut and/or freeze part of defense spending.

"It looks like Taiwan doesn't have the domestic political capacity to make big investments [in defense]."

Although he believes Taiwan is on the right track with its defense reforms, Gray said the scale of Taipei's planned increase in defense spending is insufficient to address the magnitude of the threat posed by China.

"The scale of the threat you're facing from China is so enormous, and the scale, the threat that it poses to our ability to intervene successfully, is so enormous that the incremental increases that you're making are just insufficient."

In 2025, Taiwan's Cabinet earmarked NT$647 billion (US$19.7 billion) for defense spending, amounting to 2.45 percent of GDP. President Lai Ching-te's (賴清德) government has repeatedly pledged to hike the military spending to over 3 percent of GDP.

Meanwhile, in Taipei, when asked to comment on Gray's remarks, Taipei City Councilor Vincent Chao (趙怡翔) told CNA that Washington has long made it clear that its tariff policy has nothing to do with its Indo-Pacific policy.

Chao, of the ruling Democratic Progressive Party, served as director of the political division at Taiwan's representative office in the United States from 2019 to 2021.

He said that Trump has prioritized some policies since returning to the White House earlier this year, which reflects his long-term ideology of "America first."

While the American leader has sought to reassure allies of U.S. security commitments, he also believes they -- including Taiwan -- should invest significantly more in their own defense rather than rely solely on Washington, Chao said.

On trade, he added, Trump is focused on creating jobs in the U.S. and believes the country has been taken advantage of by its trading partners for decades.