Taiwan, Hurt by Section 232 Tariffs, Watching 'Trade Paradigm Shift' Closely
Chern-Chyi Chen, deputy representative for trade and economic affairs for Taiwan in Washington, said "witnessing a trade paradigm shift" has been very interesting. Taiwan, the 11th-largest trading partner with the U.S., is accelerating its investment outside of China as the U.S.-China trade conflict builds, according to Rupert Hammond-Chambers, the president of the U.S.-Taiwan Business Council. The two were guests at a Heritage Foundation event on U.S. trade with Taiwan on Nov. 13. The event was timed to a new report on Taiwan from Heritage researcher Riley Walters.
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While the data shows Taiwan has been trying to diversify its supply chain since 2000, there are countervailing factors, Walters said. China is pressuring Taiwan to help with its Made in China 2025 efforts. "China has an innovation problem if they can't get it from the United States, they might as well get it from Taiwan," he said. Walters believes there should be a free trade agreement between the U.S. and Taiwan, as do his guests, but political constraints from China have discouraged free trade talks with Taiwan.
Hammond-Chambers said he thinks the shift out of China for Taiwan is a good development, no matter why it's happening, because of China's predatory trade practices, including intellectual property theft. He does not expect a swift end to U.S. tariffs on Chinese goods. "As long as the U.S. economy continues to expand at a relatively decent clip, I think we're going to continue to see this confrontation," he said.
Walters said he wonders if there would be an "armistice" after the G-20 meeting of the Chinese and U.S. presidents, and if that would forestall the tariffs on $200 billion in Chinese imports rising from 10 percent to 25 percent on Jan. 1, 2019. "But then the question is, the tariffs that are already in place, how long do they stay in force?"
Chen offered no views on the U.S.-China trade war -- the two countries are both massive trading partners for Taiwan -- but did talk about how the Section 232 tariffs on steel have affected Taiwan. Steel exports from Taiwan to the U.S have dropped by 10 percent, he said. "We hope this will come to an end very soon."