Listeners, welcome to Taiwan Tariff News and Tracker. Today brings significant developments in the ongoing tariff landscape between the United States, the Trump administration, and Taiwan.

On August 1, President Donald Trump announced a preliminary trade agreement with Taiwan, imposing a new 20% reciprocal tariff on Taiwanese goods exported to the United States, with the measure officially taking effect on August 7. However, Taiwan’s Office of Trade and Economic Affairs clarified that this 20% tariff is not the whole story—since Taiwanese goods remain subject to existing Most-Favored-Nation, or MFN, tariffs by sector, the effective U.S. tariff rate now sits at “20% plus N,” with N representing the specific tariff rate for each industry. Analysts warn that this could deal a particularly severe blow to Taiwan’s traditional industries, especially agriculture and fisheries, which already operate on tight margins, while export giants like TSMC have secured exclusions for semiconductor products, the primary Taiwanese export according to Politico.

The Trump administration’s tariff moves are rooted in criticisms that Taiwan’s dominance in semiconductors has come at the expense of American industry and U.S. security. While Trump excluded chips from the initial round of tariffs, he has repeatedly called on Taiwan to manufacture more semiconductors in the United States. Over the weekend, U.S. Secretary of Commerce Howard Lutnick stated in a NewsNation interview that the United States wants a 50-50 split of chip production between Taiwan and American soil, arguing this is vital for national security. Taiwan’s lead tariff negotiator, Vice Premier Cheng Li-Chiun, returned from Washington reaffirming that Taiwan rejects any such production quota, explaining, “We did not discuss this issue this time, and we will not agree to such a condition.” Negotiations over tariffs have made some progress, but the prospect of further U.S. tariffs on chips remains a serious concern for Taiwan’s high-tech exports. The Wall Street Journal reported last week that the Trump administration threatened to impose tariffs as high as 100% on chip imports unless companies moved production stateside.

This dispute comes as more than 70% of Taiwan’s exports to the U.S. are information and communications technology products, fueling a trade surplus that, according to the Taiwanese cabinet, has put the island in Trump’s crosshairs. Meanwhile, TSMC, the world’s largest contract chipmaker, continues with its $165 billion plan to build U.S. chip factories, but still maintains the bulk of global production at home. While the focus remains on semiconductors, the newly-imposed tariffs are already being felt across Taiwan’s manufacturing sector; officials warn that a full re-implementation could result in up to a 5% drop in total manufacturing production value.

Taipei has responded to these tariff increases by pledging more investment in the U.S., buying more American energy, and raising defense spending. As recently as June 10, the American Chamber of Commerce in Taiwan called on Washington to cancel its new import taxes on Taiwanese goods and resume negotiations.

That’s where we stand today. The situation remains fluid, with both Washington and Taipei signaling a willingness to keep talking, but plenty of uncertainty persists for Taiwan’s businesses and trade partners.

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