On August 1, the White House announced a new Executive Order on global reciprocal tariffs, placing a 20% tariff rate on Taiwanese goods. At a noon press conference, President Lai Ching-te emphasized that the Taiwanese government is actively working to secure a reduction in the tariff rate. He described the 20% levy announced by former President Donald Trump as a “temporary tariff,” noting that technical consultations have already concluded, and the final tariff rate could be revised downward following the conclusion of bilateral negotiations.
On the same day, analysts from the DSET spoke to major international media outlets—including Nikkei Asia, The Reporter (Taiwan), Deutsche Welle, and Le Figaro—regarding the implications of the new tariffs for Taiwan’s economy and semiconductor sector.
According to Nikkei Asia, President Lai further stated: “We hope to deepen Taiwan–U.S. economic cooperation throughout the negotiation process, and at the same time promote collaboration in security, technology, and other key sectors.”
In an interview with Nikkei Asia, Dr. Jeremy Chih-Cheng Chang, DSET CEO and Director of the Economic Security Research, noted that unlike other countries whose negotiation outcomes included detailed tariff arrangements, Taiwan’s announcement disclosed only the tariff rate without elaborating on underlying terms—suggesting that negotiations are still underway.
Dr. Chang pointed out that Taiwan’s main exports to the U.S. include graphics cards, AI servers, semiconductors, and ICT components. According to Taiwan’s Industrial Development Administration, these categories account for approximately 75–80% of Taiwan’s total exports to the U.S., and they all fall under the scope of Section 232 tariffs. Dr. Chang emphasized that the upcoming Section 232 investigation results, expected in mid-August, will be the true determining factor in shaping Taiwan’s strategic position.
Chiang Min-Yen, DSET Deputy Director for Economic Security, told The Reporter that the Section 232 investigation will directly affect semiconductor-related tariffs. Based on data from Taiwan’s Industrial Development Administration, over 80% of Taiwan’s exports to the U.S. include semiconductors and adjacent components such as AI servers, graphics cards, printed circuit boards, and networking parts.
“From the perspective of Taiwan’s overall industrial structure, the scope of Section 232 is indeed far more consequential than reciprocal tariffs,” Chiang said.
While it remains unclear whether Taiwanese semiconductors will ultimately qualify for most-favored-nation (MFN) status, Chiang emphasized that the U.S. continues to depend heavily on Taiwan’s advanced chipmaking capabilities:
“Given that reliance, Washington may be reluctant to impose overly aggressive tariffs. Even if tariffs are introduced, the cost is likely to be passed on to U.S. firms.”
At the same time, DSET Non-Resident Fellow Ho Ming-yen noted that U.S. industrial policy—including reshoring initiatives—could still lead to relatively high tariffs on semiconductors:
“It’s hard to predict. There’s a real possibility that tariffs on semiconductors may exceed the standard reciprocal rate.”
Regarding mature-node semiconductors, Chiang referenced findings from two recent DSET reports: “The Great Siege: The PRC’s Comprehensive Strategy to Dominate Foundational Chips” and “Let a Hundred Flowers Blossom: Local Competition and the Rise of Chinese Semiconductor Capacity”, which analyze how China is using state subsidies and government-led investments to depress global prices in legacy chip markets.
“If Taiwan’s mature-node chipmakers face tariff disruptions, it could create a vacuum that Chinese manufacturers will fill—undermining both U.S. and Taiwanese interests.”
While industries currently affected by reciprocal tariffs account for roughly 20% of Taiwan’s exports, they are concentrated in traditional, SME-driven sectors. Chiang welcomed the Taiwanese Cabinet’s proposed subsidy and resilience measures, calling them a step in the right direction.
He also addressed the possible 90-day extension of the U.S.–China tariff grace period, stressing that Beijing is unlikely to offer real concessions, and that any hopes of a “good deal” between Trump and China may be misplaced. If talks between Washington and Beijing fail, Taiwan could face indirect consequences.
In an interview with Deutsche Welle, Chiang emphasized the need to jointly assess both the Section 232 outcomes and reciprocal tariff framework:
“From Taiwan’s perspective, Section 232 has a more direct impact. But in legal terms, Taiwan is certainly not the only one affected—Japan, South Korea, and China also face 232 investigations in semiconductors, shipbuilding, and pharmaceuticals.”
Chiang explained that if Taiwan and the U.S. include semiconductors and Taiwan’s investments in the U.S. chip sector in the tariff negotiations:
“It would be a pragmatic approach—one that favors Taiwan, given the deep bilateral interdependence in the semiconductor field.”
DSET Non-Resident Fellow Ho Ming-yen, speaking to Le Figaro, echoed that view:
“This may be why negotiations are still ongoing. Section 232 will likely have a much greater impact on Taiwan than the reciprocal tariffs.”