Businesses Require Policy Clarity for Operational Integrity
Taiwan's Comprehensive Strategy to Counter US Tariffs
The Taiwanese government has adopted a multi-faceted approach to mitigate the impact of potential US tariffs on local businesses, particularly in key sectors like machinery, molding, autos, and more.
In early 2025, President Lai Ching-te announced five key response strategies: negotiating to improve tariff rates, supporting affected domestic industries, implementing medium- and long-term economic development plans, creating new “Taiwan plus the US” economic arrangements, and conducting industry listening tours to tailor responses.
To support the affected industries, the government prepared an NT$88 billion support plan aimed at stabilizing the economy and providing assistance to industries. The government has urged cooperation between the executive and legislative branches to expedite these measures.
Industry and labor groups have urged the government to negotiate further tariff relief with the US, warning that the cumulative tariffs could seriously hurt manufacturing sectors such as machine tools, machinery, ICT, screws, bicycles, and textiles. The machinery and related sectors are particularly vulnerable to these tariffs, prompting calls for urgent government intervention and negotiations to reduce tariff burdens.
Beyond immediate tariffs, reports indicate US pressure to relocate parts of Taiwan’s semiconductor and manufacturing industries to the US, further complicating Taiwan’s industrial strategies. However, semiconductors have been excluded from the 32% tariff.
As a new approach to address the potential impact of US tariffs on local businesses, the Ministry of Finance is also involved in a plan to accelerate the retirement of older vehicles. The Ministry of Economic Affairs plans to recommend a review of the commodity tax on vehicles to stimulate domestic car demand.
However, the lack of clear and timely communication between the ministries may be hindering the development and implementation of effective countermeasures. China Steel Corp, one of the companies affected by the tariffs, was not informed in advance of the proposed policy. The union of China Steel Corp has objected to the suggestion, stating it would undermine corporate governance and further weaken the company.
Despite these challenges, the government is planning to simulate US tariff scenarios and prepare countermeasures for local businesses. The union also suggested that the government should roll out support measures like reduced water and electricity rates or targeted subsidies. Little progress has been made due to government inertia, and the ministries have not fully explored options such as fully scrapping duties or implementing targeted tax cuts.
The government has avoided retaliatory tariffs, preferring to increase US imports and remove tariffs on American goods as goodwill measures, and keeps negotiating in multiple rounds with US officials to resolve tariff issues. The ministries have said they would await the results of trade talks before disclosing any tactical steps, which has fueled doubts over cross-ministerial or interagency coordination.
In 2018, China Steel established Sing Da Marine Structure Corp, incurring losses of NT$6.4 billion due to the government's offshore wind localization initiative. China Steel Corp reported a net loss of NT$1.66 billion (US$55.11 million) in the first half of 2023.
Minister Kuo, the Minister of Economic Affairs, suggested that China Steel Corp could grant price concessions to auto parts suppliers to help offset costs. However, this suggestion is not mentioned in the current context.
It is crucial for the government to be more transparent about the policymaking process and provide guidance to help local companies model different scenarios and prepare for the tariff shock. The government needs to address its inertia in addressing the potential impact of US tariffs to implement effective countermeasures in a timely manner.
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