Focus of U.S.-Taiwan Cooperation Shifts from Tariffs to Supply Chains and Economic Security
While U.S.-Taiwan tariff negotiations continue to draw attention, the primary focus is no longer merely tariff reduction or market access, but rather supply chain deployment, industrial cooperation, and economic security. Da-Nien Liu, Director of the Regional Development Study Center at the Chung-Hua Institution for Economic Research (CIER), pointed out that although the U.S. has recalibrated its policy tools in recent years, its continued use of measures such as Section 232 and Section 301 to drive industrial policy indicates that its core objective remains rebuilding critical industry competitiveness, enhancing supply chain resilience, and mitigating risks. Going forward, U.S.-Taiwan economic and trade cooperation will gradually transition from a traditional free trade framework to a collaborative model that balances national security with industrial development.
Four Structural Shifts Reshaping U.S.-Taiwan Trade Relations
Director Liu believes that U.S.-Taiwan relations are currently undergoing four major shifts. First, the relationship is moving from market-driven to strategy-driven, with corporate investment and supply chain configurations increasingly influenced by national policy and geopolitics. Second, the focus has pivoted from pursuing free trade to prioritizing economic security, with semiconductors, artificial intelligence, critical minerals, and supply chain resilience now serving as the core of cooperation.
Third, the focus of bilateral cooperation has expanded beyond merchandise trade to the strategic layout of high-tech industries. As Taiwanese firms have continued to scale up investments in the U.S. in recent years, Washington is placing greater emphasis on establishing a comprehensive, localized semiconductor and technology ecosystem. Consequently, future assessments of U.S.-Taiwan economic cooperation must look beyond bilateral trade volumes to scrutinize investment directions, capacity allocation, and supply chain restructuring.
Fourth, the U.S.-Taiwan industrial relationship is transitioning from high complementarity to a new model where cooperation and competition coexist. While the U.S. continues to rely heavily on Taiwan’s high-tech manufacturing capabilities, it is also accelerating efforts to boost domestic manufacturing capacity. As their partnership deepens, both sides will increasingly face industrial “co-opetition.”
Global Strategy Must Balance Industrial Clusters and R&D Capabilities
In light of expanding overseas corporate investments, there is growing public concern over whether Taiwan’s high-tech sector faces the risk of hollowing out. Director Liu noted that, in reality, overseas investment does not inevitably lead to industrial migration. The critical factor is whether core technologies, R&D capabilities, top-tier talent, and high-value-added production capacity remain anchored in Taiwan.
Therefore, Taiwan should adopt a strategy of “expanding globally while maintaining roots in Taiwan,” and interpret overseas investment as an extension of its competitiveness rather than merely a transfer of existing advantages. Meanwhile, Taiwan must continue to strengthen domestic R&D, cultivate talent, and build robust industrial clusters to enhance its indispensability within the global supply chain. It should also actively pursue technical cooperation, joint R&D, and institutional collaboration to forge a more synergistic international partnership.
Strengthening U.S.-Taiwan Cooperation While Safeguarding Taiwan’s Core Competitiveness
Amidst relentless global tech competition and shifting geopolitics, U.S.-Taiwan relations have entered a new phase centered on economic security, supply chain resilience, and shared strategic interests. Future metrics for bilateral success should focus not only on tariffs and trade volumes but also on prioritizing supply chain deployment, reciprocal investment, and institutional coordination.
Director Liu argues that while deepening U.S.-Taiwan cooperation is undoubtedly important, maintaining Taiwan’s own core competitiveness is paramount. Investments in the U.S. must be predicated on strengthening global positioning and elevating overall competitiveness, rather than hollowing out domestic industrial clusters. How to expand in the global market while continuously anchoring core technologies, R&D capabilities, and high-value-added activities in Taiwan will be the most crucial challenge for the next phase of U.S.-Taiwan trade cooperation and industrial development.
Author: CIER Editorial Team
Date: July 14, 2026