Taiwan’s chief trade negotiator Jenni Yang met with US Trade Representative Jamieson Greer at the APEC trade meeting on Jeju Island, South Korea.

Taiwan’s Vice-Premier Cheng Li-chiun said on May 16, 2025, there is optimism that further talks would lead to reduced US tariffs on Taiwan exports.

The discussions focused on the current 32% US tariffs on Taiwanese exports, which were established under US President Donald Trump.

Taiwan expressed hope for easing the tariffs and proposed increasing purchases of US goods and boosting investment in the US.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Taiwan’s economic relationship with the U.S. has undergone dramatic shifts

Taiwan’s economic relationship with the U.S. has evolved significantly since the Taiwan Relations Act was established in 1979, transforming from diplomatic uncertainty to strategic economic interdependence.

The U.S. market for Taiwan has cycled from dominance to diversification and back again. In 1990, the U.S. received 32.3% of Taiwan’s exports, which declined to just 12.21% by 2015 as Taiwan shifted trade toward China and ASEAN countries 1.

This trade pattern has reversed recently, with the U.S. becoming Taiwan’s largest export destination again in February 2025, accounting for 28.5% of total exports and surpassing China and Hong Kong 2.

The growing $73.7 billion trade surplus with the U.S. in 2024 (a 54.6% increase) has made Taiwan particularly vulnerable to tariff threats, with economists estimating the proposed 32% tariffs could impact 15-20% of Taiwan’s GDP 2.

Taiwan’s economy remains highly trade-dependent, with total trade exceeding 100% of its GDP, making these negotiations with the U.S. crucial for its economic stability 3.

2️⃣ Taiwan faces unique negotiating challenges compared to other U.S. trade partners

Taiwan must navigate trade negotiations without the formal diplomatic relations that typically facilitate such discussions, operating through the framework established by the Taiwan Relations Act rather than normal diplomatic channels.

The island’s exclusion from major regional trade agreements like RCEP and CPTPP has further limited its options for trade diversification, making the U.S. relationship even more critical to its economic future 4.

Taiwan’s approach to negotiations, promising increased purchases and investments, mirrors strategies used by Japan and South Korea. However, Taiwan faces added complexity due to perceived higher trade barriers that contributed to the initial 32% tariff proposal 2.