Taiwan Faces Economic Pressure as US Tariffs Trigger Manufacturing Contraction and Government Intervention
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Taiwan Faces Economic Pressure as US Tariffs Trigger Manufacturing Contraction and Government Intervention
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As of September 2025, Taiwan faces one of its most significant trade challenges in recent history due to aggressive tariff moves from the United States under President Donald Trump. On August 7, a preliminary agreement imposed a 20 percent reciprocal tariff on most Taiwanese exports to the U.S., with the real rate in some sectors even higher due to additional Most-Favored-Nation tariffs. According to Wikipedia’s entry on tariffs in the second Trump administration, semiconductor products—the backbone of Taiwan’s exports—were notably excluded, but traditional manufacturing, agriculture, and fishery goods are now heavily impacted. Taiwanese officials have called the tariffs “unreasonable,” but they have chosen dialogue over retaliation, proposing to increase imports from the United States and drop tariffs on American goods in return for a future resolution.
Recent reports from Taiwan’s premier industry researchers highlight how the new tariffs have pushed Taiwan’s manufacturing sector into contraction for the third month running, with the Purchasing Managers’ Index hitting its lowest in over a year. The Chung-Hua Institution for Economic Research and leading economists say the abrupt shift has especially squeezed the older economy sectors, with job cuts and reduced hours gathering momentum across machinery, metalworking, and electronics factories. According to Taiwan News, over 1,000 workers experienced reduced hours last week alone directly because of the new tariffs, with the Ministry of Labor warning that layoffs and working hour cuts are gathering pace, especially in machinery exports to North America.
In response, the Taiwanese government has rolled out an NT$88 billion plan to boost affected industries, stabilize the economy, and expedite legislative action. Premier Cho Jung-tai is urging collaboration in parliament to implement the support package swiftly, and Taiwan’s Office of Trade and Economic Affairs has stressed that negotiations with the U.S. are ongoing, aiming for greater certainty and possibly some easing of the tariffs.
Meanwhile, President Trump continues to frame the tariffs as necessary to counter what he calls “unfair dominance” in technology and trade deficits, and he’s signaled in multiple public statements that the U.S. will push for even more manufacturing investment from Taiwanese companies, especially in the semiconductor sector. There’s ongoing legal uncertainty too: following a U.S. federal appeals court ruling on August 29 that declared most of these Trump-era tariffs illegal, President Trump vowed to appeal to the Supreme Court, so there’s a real possibility that legal outcomes could reshape this trade environment again before year’s end, as reported by AOL and RegFollower.
Amid these disruptions, some Taiwanese tech giants are outperforming the market, with a 42 percent year-on-year surge in total July exports, the largest jump in over 15 years, according to All About English Mastery. But with the new tariffs in place, even these gains are at risk if the disputes drag on.
That’s all for today’s Taiwan Tariff News and Tracker. Thank you for tuning in. Don’t forget to subscribe to stay on top of every tariff twist and economic turn. This has been a quiet please production, for more check out quiet please dot ai.
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