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Taiwan Prepares for Trump’s Tariffs, and a Changed Washington

by New Edge Times Report
February 13, 2025
in Business
Taiwan Prepares for Trump’s Tariffs, and a Changed Washington
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Not so long ago, Taiwan basked in seemingly boundless, bipartisan support in Washington, where the island has long been regarded as a valiant democratic partner against China.

Now, a few weeks into President Donald J. Trump’s second term, Taiwan is adjusting to a shift in its relationship with the United States, its primary backer — one that does not focus on shared democratic ideals, and that is more uncertain and transactional. Mr. Trump has accused Taiwan of spending far too little on its own security and of gaining an unfair dominance in making semiconductors.

Taiwanese officials and businesspeople have been trying to assure the new administration of their commitment to cooperation. They have traveled to Washington for meetings, bearing charts detailing their military outlays, and attended inauguration events filled with the MAGA faithful. They have floated new deals that Taiwanese companies could broker with American businesses in gas and other fields, and tried to explain the value of Taiwan’s semiconductor manufacturing to American interests.

Underlying their efforts is an anxiety over what Mr. Trump may do, for instance, to press Taiwanese companies to move advanced semiconductor production to the United States. Mr. Trump has said he might soon impose tariffs on semiconductors. Taiwanese officials have been preparing to help Taiwanese businesses soften the blow of any such move.

“I think Taiwan just convinced itself that they had good relations with the U.S. and they had lots of friends in Congress, and they would be able to weather the storm,” said Bonnie S. Glaser, the managing director of German Marshall Fund’s Indo-Pacific program, who often speaks with Taiwanese politicians. “When Trump made those comments, I think it was a wake up call for people in Taiwan that they really didn’t know what was coming next.”

Governments around the world are trying to adjust to Mr. Trump’s combative approach. But the stakes for Taipei are especially high. The island depends on the United States for nearly all its major weapons. It sends nearly a quarter of its exports directly to the United States, and Washington is crucial in giving Taiwan political support against Beijing, which claims that Taiwan is its territory and must accept unification — by force, if deemed necessary.

Taiwanese officials and policy advisers said the island would quickly roll out measures to help its businesses hurt by any new U.S. tariffs. They spoke on condition of anonymity because of the sensitive and provisional nature of the plans, and declined to give details. Some officials have publicly hinted at the preparations. “We’re preparing for a range of scenarios,” the minister of economic affairs, Kuo Jyh-Huei, told reporters when asked about Mr. Trump’s threatened tariffs. “If we showed our hand now, that would not work to the benefit of everyone.”

Even if Mr. Trump holds off on the tariffs, Taiwan faces more pressure from his administration on other issues. They include the island’s big trade surplus with the United States, which climbed to a record $74 billion last year according to U.S. data, and its military spending and preparations, which many in Washington see as lacking, even though billions of dollars worth of orders of American military equipment are stuck in a backlog. The United States is committed by law to help Taiwan defend itself, and leaves open the possibility of intervening militarily if China tried to conquer the island.

“There’s a basic mismatch. We’ve been thinking that America and Taiwan are in a strong partnership, but America under Trump thinks Taiwan doesn’t do enough,” said Jason Hsu, a former Taiwanese lawmaker and technology investor who is now a senior fellow at the Hudson Institute. “Sooner or later, the Taiwan government will need to show up in town with a package ready to offer Trump.”

Publicly, the Taiwanese government is projecting calm confidence about relations with Washington. But Taiwanese officials’ efforts to build bridges into Mr. Trump’s inner circle during trips to Washington last month and in December, have yielded little so far, said three American officials familiar with their attempts, who described the interactions as limited.

Taiwan sent two economic officials to Washington this week to “better explain ourselves to Mr. Trump’s circle,” Mr. Kuo, the economic affairs minister, told reporters before their departure. Taiwan also hopes to buy more liquefied natural gas from Alaska, he has said.

“Taiwan is preparing some presents for Trump,” said Jeremy Chih-Cheng Chang, the chief executive officer of the Research Institute for Democracy, Society and Emerging Technology in Taipei. “They have already indicated some, as you have seen in news reports — like buying liquefied natural gas — but there are sure to be others.”

In January, executives from Taiwan Semiconductor Manufacturing Company — TSMC, the world’s most advanced chip maker — held talks with Mr. Trump’s nominee for commerce secretary, Howard Lutnick, said several people familiar with the talks who spoke on condition of anonymity.

In December, Taiwanese officials visiting Washington showed officials and Republican politicians a presentation designed to demonstrate that Taiwan has been rapidly increasing military preparations, according to people familiar with those discussions. They met with Michael Waltz, then a Florida congressman known for being hawkish on matters of national security, according to one of the people.

Taiwanese officials remain hopeful that they will find robust supporters in two men who were deeply critical of China in Congress: Marco Rubio, the secretary of state, and Mr. Waltz, now Mr. Trump’s national security adviser. But some former officials who strongly supported Taiwan in Mr. Trump’s first term have not been brought into his new administration, including Mike Pompeo, the former secretary of state.

“It’s very telling that some hard-line hawks on Taiwan have been left out,” said Christopher K. Johnson, the president of China Strategies Group, a consulting firm, and a former U.S. government intelligence officer. “It looks like Taiwan bet on some of the wrong horses.”

Half a dozen or so officials poised to take senior positions in the Pentagon have rejected the G.O.P.’s tradition of backing an expansive foreign reach, in favor of limiting U.S. military commitments abroad. They represent an ascendant foreign policy doctrine in a party that in recent years has chafed at committing more military support to Ukraine, and pushed NATO allies to spend more on their militaries.

In an opinion essay published last May, Mr. Trump’s nominee to serve as the Pentagon’s under secretary of defense for policy, Elbridge Colby, warned that Taiwan should not assume that it was indispensable to the United States. “America has a strong interest in defending Taiwan, but Americans could survive without it,” he wrote. He and other Pentagon officials have suggested that Taiwan should increase its military spending to at least 5 percent of its economic output, or about twice what it currently is spending.

The Taiwanese government has said it is committed to expanded military spending, though many Taiwanese experts and officials, privately, question the 5 percent target. President Lai Ching-te of Taiwan also faces a legislature controlled by opposition lawmakers who have accused his government of wasteful spending and reined in parts of this year’s defense budget.

At the same time, Taiwan has its own frustrations with the United States, including the big backlog of undelivered orders of arms and military equipment to the island.

“I do sense a soreness of being told to spend more when they haven’t received what they’ve already paid for,” said Steve Yates, a senior research fellow at the Heritage Foundation, referring to Taiwan. “The U.S. has to fix its defense manufacturing supply chain before it can reasonably put pressure on others to do and buy more.”

Ana Swanson in Washington and Amy Chang Chien in Taipei contributed reporting.

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