Taiwan and the United States held their first in-person meeting on tariffs in Washington on May 1, following virtual talks on April 11.

The Taiwanese delegation, led by Vice Premier Cheng Li-chiun and chief trade negotiator Yang Jen-ni, discussed tariffs and non-tariff barriers with US officials.

The Office of Trade Negotiations, under the Executive Yuan, said that the meeting was conducted in a harmonious and friendly manner. Both sides agreeing to strengthen economic cooperation for mutual benefits and more business opportunities.

This meeting came after the US imposed a 32% import tariff on Taiwanese goods in early April, targeting countries with significant trade surpluses. A 90-day pause on the tariff was later announced to allow for negotiations.

President Lai Ching-te said that Taiwan will not seek retaliatory measures and aims for a “zero tariff” arrangement like the United States-Mexico-Canada Agreement (USMCA).

🔗 Source: Focus Taiwan

🧠 Food for thought

1️⃣ Taiwan-US trade relationship has fundamentally transformed over three decades

The current tariff negotiations happen against a backdrop of dramatic shifts in Taiwan’s economic orientation since the 1990s, providing essential context for understanding today’s discussions.

Taiwan’s trade relationship with the United States has substantially rebalanced. While the US was Taiwan’s dominant export market in 1990 (absorbing 32.3% of Taiwan’s exports), by 2015 this had dropped to just 12.2% as Taiwan diversified its trade partnerships 1.

This transformation is further evidenced by Taiwan’s trade surplus with the US, which decreased from representing 72.3% of Taiwan’s overall trade surplus in 1990 to just 15.2% by 2015 1.

A major driver of this shift has been Taiwan’s manufacturing relocation to China and Southeast Asia, creating a “triangular trade” pattern where raw materials from Taiwan are processed elsewhere before being exported to the US 1.

Despite these changes, Taiwan remains the US’s seventh-largest trading partner as of 2024, showing the continued significance of their economic relationship even as it has evolved 2.

2️⃣ Taiwan faces unique economic vulnerability in tariff negotiations

Taiwan’s economy is exceptionally exposed to trade disruptions, with over 60% of its GDP derived from exports, making the potential impact of US tariffs particularly severe 3.

Economic projections illustrate this vulnerability. Taiwan’s National Development Council estimates that the proposed 32% tariffs could reduce Taiwan’s GDP growth by between 0.43 and 1.61 percentage points, potentially dropping 2025 growth from the forecasted 3.14% to as low as 1.53% 3.