Written by Yun-Chieh Wang.
Image credit: Office of Trade Negotiations 行政院經貿談判辦公室/ Facebook.
Trump’s announcement on reciprocal tariffs has created uncertainty and instability in the international trade market. Taiwan, with its strong economic ties with the United States, is expected to be impacted by the measures, especially if the 32% additional tariff and the removal of the exemption for high-tech products are implemented. This article analyses the potential impact on the Taiwanese sectors with a high value of exports to the US, and the impact on the Taiwan-US trade relationship.
The Impact of the US Tariff on Taiwan’s Exports
In 2024, Taiwan was the US’s 8th largest import resource, with a trade value of more than 116 billion US dollars, while the United States was Taiwan’s top export destination. Meanwhile, in terms of trade deficit, the US faced a gap of more than 73 billion US dollars against Taiwan in 2024, with the value increasing at a rate of 54.6% compared to the year 2023. Table 1 below lists the top 5 Taiwanese products with the highest export value to the United States in 2024.
Table 1: Taiwan’s top 5 products import to the United States (value)
| HS 4-digit code | Product description in brief | Taiwan’s exports to the US /Taiwan’s total exports to the world | US imports from Taiwan /US imports from the world | ||||
| Ratio in 2022 | Ratio in 2023 | Ratio in 2024 | Ratio in 2022 | Ratio in 2023 | Ratio in 2024 | ||
| 8471 | Automatic data-processing machines and units | 60.78% | 55.47% | 60.91% | 8.54% | 20.80% | 36.42% |
| 8542 | Electronic integrated circuits and parts | 1.76% | 2.10% | 4.49% | 7.42% | 9.73% | 18.35% |
| 8473 | Parts and accessories for machines covered under 8469-8472 | 38.58% | 44.28% | 46.72% | 19.53% | 19.57% | 12.38% |
| 8517 | Telephone sets and related apparatus | 43.43% | 46.82% | 45.74% | 4.43% | 5.15% | 4.95% |
| 8708 | Parts and accessories for tractors, motor vehicles of specific use | 60.86% | 53.84% | 53.31% | 3.95% | 2.69% | 2.51% |
| All products | 15.68% | 17.68% | 23.47% | 2.22% | 2.41% | 3.32% | |
Source: Data from ITC trade map, with value calculated by the author
Following Trump’s announcement on the reciprocal tariff on 2 April with all trading partners “indiscriminately” subject to an additional 10% tariff, several pharmaceutical, wood, metal, and machinery products were excluded from the additional tariff. Further, the US Customs and Border Protection on 5 April announced a list of products exempted from the reciprocal tariffs. The two exemptions have excluded most of the goods in Table 1. However, the Bureau of Industry and Security (BIS) of the United States on 16 April requested public comments regarding how semiconductors could affect national security with the deadline on 7 May. BIS action links with the belief that the Trump administration is planning to impose an additional tariff or alter the regulation related to the semiconductor and semiconductor manufacturing equipment (SME), and their derivative products, with Taiwan being one of the primary targets.
Table 1 shows that, among the top 5 Taiwanese export products to the US, four have the US as their major destination. Considering the difficulties in diversifying the export partners in a short period, if Trump, after public comments, decides to impose tariffs on those exempted products, it would directly impact the Taiwanese exporting companies.
Additionally, Taiwan was subject to an adjusted tariff rate of 32% when the White House announced the reciprocal tariff on 2 April. The tariff will undoubtedly place the Taiwanese export sector at a disadvantage, considering the rates to Japan and South Korea are lower than those of Taiwan, with the rates at 24% and 25%, respectively.
Taiwan—US Trade Relations
Regarding the adjusted tariff rate, though Trump has further announced a 90-day pause on those tariffs, the list has led to instability and unpredictability in the global market. Many experts have questioned the intention of imposing such a tariff on an important US ally.
It is well known that the main purpose of Trump’s tariffs is to restructure the global trade for a “fairer” trade environment. In the 2025 US report on Foreign Trade Barriers, Taiwan’s non-tariff measures on genetically engineered products, technical barriers to trade in pork and automobiles, as well as sanitary and phytosanitary barriers to beef, animal byproducts, and usage of biotechnology were mentioned. This explains why Trump claimed that Taiwan has imposed a high amount of tariffs on US products, leading to a 32% additional tariff, given the fact that Taiwan only imposed around 2% of tariffs on imported US products.
Since Trump announced the tariff policy, Taiwan has proactively expressed its willingness to negotiate with the US government. According to Taiwan’s Office of Trade Negotiations, Taiwan and the United States concluded the first round of bilateral negotiations on 1 May. The discussion included topics such as tariffs, non-tariff barriers, and Taiwan-U.S. collaboration on economic and trade, with both parties looking forward to future cooperation on a mutually beneficial basis.
Due to the complexity of politics and security concerns, the current ruling party—the Democratic Progressive Party (DPP)—has been strategically diversifying its trade relations from being overly dependent on China. Policies such as the New Southbound Policy, Trade and Investment Dialogue with the EU, and the substantive progress on the Taiwan-U.S. Initiative on 21st-Century Trade have proven the effort of the Taiwanese government. In 2024, the US finally surpassed China, becoming Taiwan’s largest trading partner.
If Taiwan addresses Trump’s tariff passively, two consequences might happen. The first is that sectors with a significant share of exports to the US will be heavily impacted by the additional tariff, affecting Taiwan’s economic growth. Second, companies would have to find new destinations for their products, and it is highly possible that China will resume being the island’s top trade partner. Thus, it explains the critical importance of the Taiwanese government to maintain the stability and predictability of the trade ties with the US promptly.
Global Trade Reaction
With the strong economic ties between Taiwan and the United States, it is undeniable that the additional tariff imposed by the Trump administration would affect Taiwanese exports negatively, especially if the Trump administration decides to remove the exemption on high-tech products. Also, as the nature of the global supply chain has merged several countries into the production of one product, Trump’s tariff on other trading partners will also affect Taiwan’s exports and lead to a downturn in global economics.
What is more challenging to the international society is the uncertainty of the current US policy. Investors and producers could not have a regular business plan as usual because the global market might change the next day. For example, the soaring additional tariff on China has already interrupted the normal business practices of some US trade partners, and the manufacturers cannot precisely predict the production needed for the next cycle. With those challenges, some other US trade partners have started to explore other options to diversify their export destinations.
Furthermore, while Trump hopes to bring back job opportunities to the US, what also needs to be taken into consideration is the higher labour cost and the pricier imported products, leading to a higher production cost. Companies, while suffering from the higher tariff rate, would also need to assess the profitability of establishing new firms in the US.
Trump’s reciprocal trade policy disturbs the order of the international trade regime. The spirit of establishing a reciprocal and mutually advantageous multilateral trading system, as carved in the Marrakesh Agreement of the World Trade Organisation (WTO), has been challenged, and every global citizen is now awaiting the solutions. With this current situation, time is needed to observe the movements of the Taiwanese government and the exporters, with the necessity of remaining agile.
Yun-Chieh Wang holds a Master of International Economics degree at Geneva Graduate Institute. She obtained her bachelor’s degree in Agricultural Economics from National Taiwan University, where she discovered her passion for international trade. To better understand the interaction between trade and domestic policy, she decided to pursue her first master’s degree in Public Policy at the University of Tokyo. After graduation, she worked at Chung-Hua Institution for Economic Research (CIER) as a research associate, focusing on trade analysis. Her job at CIER broadened her knowledge of global trade issues, motivating her to pursue further studies in Economics in Geneva with a specialisation in trade.
This article was published as part of a special issue on ‘Trump’s Tariffs: What does it mean for Taiwan?‘.
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