President-elect Donald Trump has announced his plan to name Howard Lutnick, a prominent China critic, as Secretary of Commerce. Lutnick will oversee the management of US tariffs and trade policies.
With Trump's staffing choices signaling a deliberate aim to curtail China's advancement, senior officials from Taiwan's Ministry of Economic Affairs (MOEA) are carefully assessing if the suspension of China's permanent normal trade status will have implications for Taiwan.
Major changes in US policy direction are anticipated following Trump's victory in the presidential election. His administration appears to be preoccupied with two primary themes: "America First" and China, based on his public statements. Senior government officials remain hesitant to comment on the pros and cons of Trump's appointments to prevent misunderstandings in future Taiwan-US interactions, even though some Taiwanese legislators believe a harsher US attitude toward China might strengthen Taiwan-US relations.
MOEA Deputy Minister C. C. Chen noted that the previous Trump Administration's implementation of an "America First" trade policy in 2017 resulted in opportunities and challenges in the global economic environment. These policies subsequently altered global supply chain restructuring and tariff strategies, reshaping international trade dynamics.
Concerned about the potential impact on Taiwan when Trump returns to power in 2025, Chen stated that if the new Trump administration imposes a comprehensive 60% tariff on all Chinese imports and revokes China's permanent normal trade status, US-China competition would intensify. Although some Taiwanese businesses may gain from order transfers, this situation would add uncertainty to global trade and have unknown consequences for Taiwan's economy.
Import tariff increases would raise the cost of imports for the US, resulting in lower consumer demand and impacting global product exports to the country. Furthermore, other countries may implement retaliatory trade policies, deepening global protectionism.
Addressing concerns about the potential 60% tariff on all Chinese-made products bound for the US, Chen explained that while over 70% of Taiwan's publicly traded companies have stakes in China, mainly in computer peripherals and electronics manufacturing, many Taiwanese manufacturers have already begun establishing facilities in China to coordinate with brand vendors, who are increasingly diversifying their markets to lessen manufacturing dependency on China as part of risk mitigation activities.
In anticipation of a potential influx of Taiwanese businesses returning home following Trump's re-election, the MOEA intends to extend its "Three Major Investment Plans for Taiwan," providing support to those seeking to relocate operations to the US or Europe.
Chen emphasized that the MOEA must plan in response to Trump's tariff proposals. The ministry will discuss with US counterparts how Taiwan's trade surplus benefits the US, based on data. Taiwanese exports help revitalize domestic industry, benefiting the US economy and creating job prospects. Furthermore, Trump's initiatives aim to encourage the US technology, manufacturing, and employment sectors. These are the sectors where Taiwan and the US may effectively collaborate, ensuring a resilient supply chain and mutual benefits.
The MOEA's future initiatives will primarily focus on two aspects: first, increasing the number of Taiwanese enterprises participating in the SelectUSA Investment Summit to showcase Taiwan's investment capabilities; and second, assisting Taiwanese companies in exploring business opportunities in the US through an "offshore within borders" policy, resulting in a complete industrial supply chain in the US and additional job opportunities.
