The tariff negotiations between Taiwan and the U.S. are ongoing, with the U.S. recently announcing a provisional 20% tariff on imports from Taiwan as of August 1st. This decision has captured considerable attention from both industries and consumer markets alike. Hsien-Ming Lien, President of the Chung-Hua Institution for Economic Research (CIER), noted that this move represents a strategic arrangement rather than an outcome. The Trump administration is reshaping global supply chains via reciprocal tariffs and Section 232 of the Trade Expansion Act, requiring Taiwan to adapt flexibly and turn pressure into opportunities for industrial enhancement and diversification.
President Lien analyzed that Section 232 covers semiconductors as well as information and communication technology products, which has a significant impact on Taiwan’s exports. Trump has previously threatened to impose 100% tariffs on semiconductors, and Taiwan could face renewed pressure if it fails to offer investment or market-opening commitments. President Lien proposes that Taiwan should bundle reciprocal tariffs with Section 232 negotiations and use TSMC and U.S. supply chain investments as bargaining tools to secure most-favored-nation treatment and mitigate dual risks.
Recent uncertainties in negotiations have taken a toll on the domestic automotive market. In August, new car sales plummeted to just 29,460 units, reflecting a 17% decrease from the previous month. This decline marks the second-lowest sales record of the year, underscoring a prevalent wait-and-see attitude among consumers. Brands including Tesla and Luxgen have cut prices to compete for market share. However, experts caution that tariffs account for only about 10% of vehicle prices, limiting long-term price reduction potential.
As such, President Lien recommended that the government should design a “tax rebate subsidy” mechanism whereby, if consumers purchase vehicles upfront and tariffs are subsequently reduced, the government could refund the difference to minimize the wait-and-see deadlock and provide short-term stimulus to purchasing sentiment. He emphasized that while U.S.-imported vehicles face a greater impact, it should be a temporary phenomenon, and prompt policy intervention can help stabilize market confidence.
Author: CIER Editorial Team Date: September 3, 2025