The new 32% customs tariff on Taiwan announced by the President of the United States of America (USA) Donald Trump on April 2, 2025, represents a significant breaking point in Taiwan–USA relations. Except for semiconductor products, which were excluded from the scope of the tariffs, many export items from Taiwan to the USA are affected by this implementation. It is clear that the decision directly threatens Taiwan’s position in the global supply chain and especially its economic growth based on electronic exports. On the other hand, this move reflects not only an economic level but also a more pragmatic and demand-oriented approach in the USA’s geopolitical attitude towards Taiwan.
The Taiwanese Government openly reacted to the announced tariffs and evaluated the implementation as a problematic step in terms of both economic logic and diplomatic customs. In the statement made by Cabinet Spokesperson Lee Hui-chih, it was expressed that the said customs duties were determined with a unilateral approach and that they seriously damaged Taiwan’s commercial interests. In this context, it was also shared with the public that Taiwan would lodge a strong official objection to the Office of the United States Trade Representative.[1]
The sharp decline in the Taiwanese stock market after the announcement of the tariff decision revealed that the economic fragility deepened. The government’s activation of a 15-billion-dollar stock market stabilization fund should be read as an intervention aimed at compensating for the loss of confidence in the markets.[2] Nevertheless, the index losing value by 5.8% and falling to the lowest level in the last 15 months reveals that the effects of the tariffs on the Taiwanese economy will not remain limited.
The Taiwanese side sees the said step not only as an economic restriction but also as a political move that could undermine the mutual trust in the increasingly intense Taiwan-USA relations in recent times. Especially considering that the recent increase in exports to the USA is directly related to Taiwan’s advanced production capacity and competitiveness based on high technology; it is clear that this decision carries the quality of a structural blow to the Taiwanese economy. The taxation of products outside the semiconductor sector, which constitutes the basis of this increase, can also be interpreted as an effort to limit the advantages Taiwan has obtained in high value-added production areas.
In the statement he made on April 6, 2025, President Lai Ching-te announced that following the USA’s decision to apply 32% customs tariffs on some products imported from Taiwan, the government would respond to this situation on five strategic axes.[3] This announced plan reveals that Taipei adopts a multi-layered and future-oriented approach in crisis management; it includes not only short-term reactions but also policy steps prioritizing structural transformations.
The first strategy aims to deepen the negotiation processes with the USA regarding the tariffs. In this context, Taiwan has established a multi-actor negotiation team, involving not only executive bodies but also academia and the private sector. This multi-actor structure shows that Taiwan aims to act not only with a state reflex but also with social legitimacy and technical expertise. The proposal of a model inspired by the United States–Mexico–Canada Agreement reinforces Taiwan’s desire to integrate into the American systematics and reveals its intention to turn the crisis into a strategic opportunity.[4]
Bu This strategy is also aimed at balancing economic asymmetry. The plans to increase imports from the USA and to grow investments in the USA show that Taiwan is following a “balance policy” that considers not only its own economic interests but also the expectations of the other side. Especially procurement agreements to be made in strategic areas such as defense and energy ensure that Taiwan is positioned in the negotiations not only as a victim actor but also as a partner providing economic contribution to the USA.
The second strategy focuses on the support of industries. The Taiwanese Government will offer special precaution packages for traditional industries and micro, small, and medium-sized enterprises that will be affected by the tariffs.[5]The announcement of special packages aimed at absorbing the negative effects of the tariffs shows that a governance understanding which considers the social dimensions of the economic cost has been adopted. This is also an extension of Taiwan’s effort to give confidence not only to external actors but also to internal social segments.
The third strategy targets the medium and long-term structural transformation of the Taiwanese economy.[6] This strategy is not only a crisis response but also indicates that Taiwan is preparing for the “economy of the future.” The emphasis placed on areas such as artificial intelligence, semiconductors, health technologies, and smart manufacturing reveals Taiwan’s intention to further advance its high value-added production capacity. Here, the message is given that Taiwan is determined to maintain its technological superiority even under external pressures.
The fourth strategy aims to strengthen Taiwanese businesses in the global market with the “Taiwan plus one” model.[7]The government plans to encourage domestic investments, solve infrastructure problems, and improve the investment climate by removing regulations. This will support domestic companies to stay and grow in Taiwan. In addition, it will be ensured that Taiwanese businesses increase their production facilities abroad, establish stronger economic ties with the USA, and gain more access to U.S. markets. This approach acknowledges that in order for Taiwan to survive in the global market, it needs strong collaborations not only domestically but also abroad. Taiwan’s efforts both to improve the investment environment domestically and to make overseas production facilities strategic show that it continues its claim of being a stable investment center even during times of crisis.
The fifth and final strategy foresees the government directly establishing contact with industry representatives.[8] This strategy shows that the Taiwanese administration has adopted not only a technocratic but also a participatory crisis management approach. Basing economic reforms and support mechanisms on data and needs coming from the field shows that Taiwan is in a policy-making process that works not only top-down but also bottom-up.
In general, the strategies Taiwan follows against the U.S. tariffs reveal that the country is acting not only with the current economic difficulties but also with long-term growth and development goals. Taiwan does not only see the crisis as a threat but is also in an effort to create strategic opportunities out of this situation. The country has adopted various strategies to strengthen its domestic economy, reduce foreign dependency, and gain a stronger position in global markets. These strategies show that Taiwan, by demonstrating a flexible and dynamic crisis management, is not only trying to cope with external economic pressures but also trying to strengthen its internal innovative potential. In this way, Taiwan is both improving its internal economic structure and building a forward-looking vision with strategic investments and long-term transformation processes in order to remain competitive at the global level.
Taipei has also announced that it has decided not to retaliate against the 32% customs duty imposed by the USA.[9] With this decision, the Taiwanese Government stated that it would prioritize resolving the issue through solution-oriented negotiations with the USA and announced that it proposed to offer zero customs duty in response to the tariffs and to purchase more investment and products from the USA. By avoiding retaliation, Taiwan aims to strengthen strategic communication and produce concrete solutions.
As a result, the 32% customs tariff announced by the USA on April 2, 2025, marks an important turning point in Taiwan–USA relations. Taiwan evaluates this economic pressure not only as an economic threat but also as a geopolitical challenge. However, the Taiwanese Government aims to handle this situation with crisis management by taking five strategic steps. Among these are the deepening of negotiations with the USA, protection of the domestic economy, acceleration of structural transformation processes, strengthening of global collaborations, and direct contact with industry representatives. Instead of retaliation, Taiwan is trying to turn these challenges into opportunities and increase its economic resilience by adopting a diplomatic and strategic approach.
[1] “Trump’s Tariffs Don’t Apply to Chips, but Taiwan Remains Wary”, The New York Times, https://www.nytimes.com/2025/04/03/business/trump-tariffs-taiwan-chips.html, (Date Accession: 09.04.2925).
[2] “Taiwan hopes for quick agreement with US on tariffs, stocks swoon again”, Reuters, https://www.reuters.com/world/asia-pacific/taiwan-hopes-quick-agreement-with-us-tariffs-issue-2025-04-09/, (Date Accession: 09.04.2025).
[3] “President Lai delivers remarks on US tariff policy response”, Office of The President Republic of China (Taiwan), https://english.president.gov.tw/News/6935, (Date Accession: 09.04.2025).
[4] Ibid.
[5] Ibid.
[6] Ibid.
[7] Ibid.
[8] Ibid.
[9] “Lai says Taiwan has no plans to retaliate against Trump’s tariffs”, Taiwan News, https://www.taiwannews.com.tw/news/6078215, (Date Accession: 09.04.2025).
