The Executive Yuan on Friday announced a bold NT$88 billion (US$2.65 billion) stimulus and support plan to counteract the anticipated economic shock from sweeping new U.S. tariffs introduced by President Donald Trump. These “reciprocal tariffs” include a 32% import duty on most Taiwanese goods, striking a blow to Taiwan’s major export industries.
🌍 Context and Background:
The new U.S. tariffs are part of Trump’s “Liberation Day” trade initiative aimed at correcting trade imbalances. They will affect dozens of countries, including Taiwan, and focus heavily on electronics, auto parts, machinery, steel, and agricultural products. These duties come at a time when Taiwan’s export-reliant economy is still navigating post-pandemic global uncertainties.
According to Taiwan’s Ministry of Economic Affairs, Taiwan exported US$111.4 billion worth of goods to the U.S. in 2024, comprising 23% of its total exports. The new tariffs could shake this foundation, particularly since Taiwan holds a US$64.9 billion trade surplus with the U.S.
📊 What the NT$88 Billion Support Plan Includes:
🔹 NT$70 Billion for Industrial Support
- Lowering loan interest rates for affected exporters
- Administrative cost reductions to reduce business burdens
- Expanding tax exemptions to help companies preserve margins
- Incentives for R&D and new market exploration to reduce U.S. dependence
🔹 NT$18 Billion for Agricultural Relief
- Subsidized loans for farmers
- Support for export diversification
- Subsidies for equipment upgrades in orchid, fish, and edamame sectors
🏛 Legislative Path
Premier Cho Jung-tai confirmed this budget requires approval from the Legislative Yuan. He aims to meet both ruling and opposition lawmakers to secure bipartisan support.
💥 Potential Economic Impact:
While government officials did not specify GDP effects, Taiwan’s heavy reliance on U.S. markets for its ICT sector (52% of exports to the U.S.) suggests significant disruptions are likely. Especially vulnerable are:
- Semiconductors and electronics (TSMC ADRs already fell 7% after the announcement)
- Auto parts (25% tariff expected by May)
- Agriculture (orchids, tilapia, bass, and dolphinfish)
These industries are core to Taiwan’s economy and job market, so the government’s early and targeted intervention is seen as essential.
🧠 Expert Insight: What Makes This Tariff Different?
Unlike past trade actions, Trump’s latest tariffs are explicitly tied to perceived currency manipulation and trade imbalance. Taiwan’s central bank and Financial Supervisory Commission are now closely monitoring forex trends, anticipating further implications for currency markets and export competitiveness.
These tariffs differ from traditional protectionism in that they act retroactively and lack multilateral consensus, heightening unpredictability.
🧭 Strategic Outlook:
Taiwan’s strategic options moving forward:
- Deepen trade ties with Southeast Asia and Europe to mitigate U.S. dependence
- Accelerate domestic innovation to create higher value-added exports
- Engage in diplomatic dialogue to push for sectoral exemptions (like semiconductors)
📌 FAQs:
When will the U.S. tariffs take effect?
The 32% import tax on most goods takes effect on April 9, while a 25% tariff on auto parts is expected by May 3.
What sectors are most affected?
Electronics, IT, steel, machinery, auto parts, construction materials, and agriculture (notably orchids and fish products).
How will the NT$88 billion be spent?
NT$70B for industrial support (loans, tax cuts, diversification), NT$18B for agriculture (loans, equipment, subsidies).
Will Taiwan negotiate with the U.S.?
Yes, but results are uncertain. Cross-border trade talks may occur via backchannels or multilateral forums.
Is this tariff permanent?
It’s unclear. Trump’s announcement lacked an end date, but future negotiations or WTO appeals could modify terms.
