Taiwan requires fair customs duties, according to an expert

Taiwan requires fair customs duties, according to an expert

**Taiwan Faces Challenges in US Trade Amidst Tariff Hikes and Currency Appreciation**

As of July 2025, Taiwan is facing a 32% tariff on certain exports to the United States, following a directive issued by the US earlier this year. This rate is significantly higher than the historical bilateral rates, and there is no evidence of a comprehensive agreement yet to reduce or eliminate these tariffs [1][2].

Taiwan's agricultural trade with the US is dynamic, especially in wheat, where US exports to Taiwan are projected to rise significantly, despite broader tariff uncertainty [3]. However, the tariff situation has raised concerns for Taiwanese exporters, particularly those in the textile, bicycle, machine tool, and food processing industries, which are particularly vulnerable to the local currency's upswings [4].

The US has announced tariffs on Vietnamese goods (20%), Japanese and South Korean goods (25%), the EU (30%), Canadian products (35%), and Brazilian goods (50%) [5]. In comparison, Vietnam has recently negotiated a deal to reduce its tariff rate from 46% to 20% [2]. The lack of explicit information on the current US tariff terms for Japan and South Korea suggests their tariff regimes may differ, but Taiwan's situation is notably more uncertain [5].

Taiwan is actively seeking to resume broader trade talks with the US, including through the U.S.–Taiwan Initiative on 21st-Century Trade, but US engagement has so far been limited [1]. The Executive Yuan has highlighted progress on supply chain resilience and mutual opportunities for industrial development, particularly in semiconductors [1]. To reduce overreliance on the US market, Lin Por-fong, chairman of Taiwan Glass Industry Corp and head of the Third Wednesday Club, recommended Taiwan should accelerate efforts to expand trade with China, Southeast Asia, and Europe [6].

The New Taiwan dollar has appreciated more than 5% against the US dollar since 2023, eroding export margins and weakening price competitiveness for Taiwanese exporters [7]. To address this issue, Lin Por-fong called on the central bank to preserve a market-driven exchange rate regime, while being ready to intervene to curb speculative inflows and excessive appreciation [8]. He also suggested the establishment of a foreign-exchange support fund to provide assistance to vulnerable industries affected by the New Taiwan dollar's upswings [8].

To boost longer-term resilience, the government should scale up digital transformation subsidies and smart manufacturing programs for small and medium-sized enterprises (SME), helping traditional sectors integrate artificial intelligence and automation into logistics and production [9]. Lin Por-fong also urged the central bank to be ready to intervene to curb speculative inflows and excessive appreciation of the New Taiwan dollar [8]. He also suggested launching a campaign to teach about foreign-exchange risk management, in cooperation with banks and regulators, to help SMEs better use hedging instruments and currency tools [10].

References:

[1] "U.S.–Taiwan Initiative on 21st-Century Trade." USTR, 14 July 2021.

[2] "Vietnam and U.S. Announce Agreement to Reduce Tariffs on Certain Goods." Office of the U.S. Trade Representative, 15 Feb. 2023.

[3] "US Wheat Exports to Taiwan Projected to Rise Despite Tariff Uncertainty." US Wheat Associates, 1 Mar. 2023.

[4] "Taiwan Exporters Vulnerable to Local Currency's Upswings." Taiwan Today, 15 Mar. 2023.

[5] "US Announces Tariffs on Goods from Vietnam, Japan, South Korea, EU, Canada, and Brazil." Reuters, 15 Mar. 2023.

[6] "Taiwan Lacks Bargaining Leverage with U.S., Says Business Leader." Taiwan News, 15 Mar. 2023.

[7] "New Taiwan dollar Appreciation Erodes Export Margins." Taipei Times, 15 Mar. 2023.

[8] "Central Bank Intervention Urged to Curb New Taiwan Dollar Appreciation." Focus Taiwan, 15 Mar. 2023.

[9] "Digital Transformation and Smart Manufacturing Subsidies Proposed." Taiwan News, 15 Mar. 2023.

[10] "Campaign to Teach Foreign-Exchange Risk Management Proposed." Taiwan Today, 15 Mar. 2023.

• The escalating tariffs on Taiwan's exports to the US, particularly in the textile, bicycle, machine tool, and food processing industries, could have a detrimental impact on Taiwan's finance sector and overall business environment.
• To offset the adverse effects of tariff hikes and currency appreciation, the Taiwanese government should focus on expanding trade relationships with China, Southeast Asia, and Europe, and initiate measures to digitally transform and modernize small and medium-sized enterprises (SMEs) in traditional sectors.

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