Listeners, today’s top headline is the impact of Donald Trump’s sweeping “Liberation Day” tariffs on global trade, with a special focus on Taiwan’s position amid quickly evolving U.S. tariff policies. On April 2, 2025, President Trump declared a national emergency over the U.S. trade deficit and signed Executive Order 14257, launching a 10% baseline tariff on nearly all imports, including those from Taiwan, with the stated aim of making U.S. tariffs “reciprocal” to those faced by American exporters. These measures marked the highest average U.S. tariff rate since World War II, according to Deutsche Bank Research, and rattled global markets.

The Trump administration’s two-tiered system started with a 10% tariff from April 5, followed by higher country-specific rates, though most nations—including Taiwan—remain at the baseline 10% rate. Taiwan, not listed among countries subject to even higher rates, has resorted to front-loading exports to the U.S. to exploit tariff exemptions while they last.

Despite the headwinds, Taiwan’s economy has proven resilient. Cathay Financial’s latest outlook, released today, boosts Taiwan’s 2025 GDP growth projection to 4.5% from 2.8%, citing robust export activity in tech and AI. However, the report also warns of a looming 2026 slowdown as tariffs bite and demand normalizes. There’s concern over weak private consumption that policymakers may try to boost with direct cash handouts.

Listeners should note that the legal status of these tariffs is in flux. The United States Court of International Trade ruled in May that Trump exceeded his authority by imposing tariffs under the International Emergency Economic Powers Act, but the tariffs remain in effect while the administration appeals. Most recently, in late August the Federal Circuit Court of Appeals reaffirmed Trump’s overreach but stayed its decision, keeping tariffs in place as the Supreme Court considers whether to take up the case.

Meanwhile, regional tensions mount, with the U.S. pushing Southeast Asian nations to block transshipped Chinese exports that might evade tariffs, and pressing for stricter country of origin rules. This broader effort to tighten trading partners’ links with China has heightened scrutiny on supply chains involving Taiwan, which sits at the intersection of U.S.-China trade competition.

In Washington, Democrats urge Trump to secure a trade deal with China that addresses what they describe as Beijing’s overproduction problem, particularly in sectors like steel and solar, that threaten global industrial stability. At the same time, the administration is leveraging tariffs as both a bargaining chip and a blunt negotiating tool with trading partners in Asia and the Pacific.

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