The United States has imposed a provisional 20% reciprocal tariff on Taiwanese products exported to the U.S. starting August 1, drawing significant attention both domestically and internationally. Compared to the 15% tariff rates granted to Japan and South Korea, Taiwan’s starting point appears relatively high. Hsien-Ming Lien, President of the Chung-Hua Institution for Economic Research (CIER), noted that reciprocal tariffs are generally “additive,” meaning they are imposed on top of existing tariffs. Thus, initial tariff rates are often set as bargaining chips, with subsequent adjustments based on bilateral negotiations.
The CIER’s analysis indicates that the U.S. move aims to compel Taiwan to propose satisfactory procurement, investment, and market-opening plans, or risk further tariff increases. Taiwan’s trade surplus with the U.S. has become a focal point in negotiations. U.S. President Trump frequently combines Section 232 of the Trade Expansion Act with tariffs on steel, aluminum, semiconductors, and ICT products, covering nearly 70% of Taiwan’s exports to the U.S. President Hsien-Ming Lien suggested that Taiwan should bundle reciprocal tariff issues with Section 232 negotiations and fully leverage TSMC’s $165 billion investment plan in the U.S., along with supply chain vendors’ investments, as bargaining chips.
In international comparisons, South Korea committed over $350 billion in investments and significantly increased U.S. energy purchases to secure lower tariffs; Japan exchanged market openings and defense cooperation for trade concessions. These cases show that securing tariff reductions often requires substantial costs. President Hsien-Ming Lien emphasized that while pursuing concessions, Taiwan must carefully assess the long-term impacts of any commitments.
From an industry perspective, U.S. tariff policies directly affect major export items to the U.S., such as semiconductors, ICT equipment, machinery, and chemicals. If tariffs remain high, they could undermine the competitiveness of Taiwanese products in the U.S. market and prompt some companies to accelerate investments or shift production capacity there. The CIER views this as both a challenge and an opportunity to advance global industry layouts and upgrades.
For strategic deployment, President Hsien-Ming Lien recommended that the government and industry adopt three key directions:
- First, flexible negotiation strategies: While seeking tariff reductions, integrate issues across security, technology, investment, and other areas to enhance bargaining power.
- Second, supply chain diversification: Reduce reliance on single markets, particularly excessive concentration on China, by deepening cooperation with the U.S., Europe, and ASEAN to spread risks.
- Third, industry upgrades and technology cooperation: Use tariff pressures to drive high-value-added product development and market expansion, while seeking collaboration opportunities with the U.S. in key technologies, energy, and the digital economy.
The CIER believes that Taiwan-U.S. trade relations extend beyond bilateral trade balances to Taiwan’s positioning in global supply chains and the international economic system. Facing U.S. tariff strategies, Taiwan must demonstrate adaptability, transforming short-term pressures into momentum for long-term competitiveness. Through prudent negotiations, strategic investments, and structural transformations, Taiwan has the opportunity to consolidate and elevate its strategic position in the new global trade landscape.
CIER Editorial Team
Date: August 13, 2025