The United States has fully unveiled its reciprocal tariff rates, once again sparking volatility in the international economic order. At the “Taiwan’s Capital Market Summit,” Hsien-Ming Lien, President of the Chung-Hua Institution for Economic Research (CIER), noted that Taiwan’s tariff rate with the U.S. is projected to be between 15% and 20%, a situation that calls for cautious optimism. Given Taiwan’s substantial trade surplus with the U.S., President Lien stressed that the U.S. is likely to demand market access in exchange for entry. He emphasized that Taiwan should seize this opportunity to promote the upgrading of its traditional industries, catering, and service sectors, while also strengthening its legal, financial, and international tax service capabilities to turn challenges into opportunities.
Understanding Trump’s Mindset to Find Negotiation Entry Points
President Lien noted that Donald Trump is an unprecedented U.S. president whose negotiation logic is more like a “Costco model,” where one must pay a “membership fee” (tariffs) to enter the market. Trump isn’t seeking to have all goods enter the U.S. Instead, he chooses partners who offer valuable cooperation using criteria such as industrial complementarity, geopolitical location, and distance from China.
“Investment, market opening, procurement, and preventing transshipment” are the 4 areas Trump values most, according to President Lien. The ultimate goal of preventing transshipment is to contain mainland China. Trump only focuses on what benefits the U.S. So, if Taiwan truly wants to secure a favorable tariff rate, it will likely need to propose how Taiwan’s semiconductor industry can leverage its advantages to cooperate with the U.S.’s AI development and help Trump achieve his goal of making the U.S. an AI powerhouse.
Global Restructuring in the Era of High Tariffs
Trump’s trade policy in his second term will adopt an “external tariff increase and internal tax cuts” strategy that uses an average 15% tariff to offset the tax cut shortfall. While friend-shoring has already prompted some manufacturing to move overseas, the future impact will be even more comprehensive. As an export-oriented economy, Taiwan’s listed companies and industries must accelerate strategic adjustments and enhance their response capabilities to maintain a competitive advantage amid the turbulence.
Taiwan’s provisional tariff rate is currently 20%, and the industry hopes to see it reduced to 15%. However, President Lien cautioned, “We are in a hurry; they are not.” Being overly eager could put Taiwan at a disadvantage. A tariff reduction will come at a significant cost and could provoke domestic political disputes, potentially hindering the agreement’s implementation. He cited the examples of Japan and South Korea, noting that even after reaching an agreement, a lack of sufficient domestic public and political support could create obstacles in its subsequent execution and even impact bilateral relations.
Industrial Upgrading and a Second Round of Internationalization
Taiwanese businesses should expand their presence in the U.S. and diversify market risks. Traditional industries should adopt AI and undergo a green transformation to enhance competitiveness. They should also leverage national resources to expand international channels, support U.S. re-industrialization, and embark on a “second round of internationalization.” President Lien pointed out that while the semiconductor industry has a high output value, it provides limited employment. In contrast, sectors such as machine tools and other metal products have more employees, but their output value continues to decline. He suggested that Taiwan should use this opportunity to invest in the U.S. to upgrade its traditional and service industries.
Facing the U.S.’s high-tariff policy and the restructuring of the global supply chain, Taiwan must grasp Trump’s negotiation logic and leverage its semiconductor and AI advantages as bargaining chips. By combining this with strategies for industrial upgrading and market diversification, Taiwan can forge a resilient supply chain and capital market, seize opportunities, and turn crises into opportunities in this new international landscape.
CIER Editorial Team
Date: August 14, 2025