Taiwan Faces 20% U.S. Tariff, Seeks Talks

Intermediate | August 4, 2025

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New Tariffs Spark Concern

Why the U.S. Imposed Tariffs on Taiwan US Tariff

On August 1, 2025, the U.S. government announced a “temporary” 20% Taiwan US tariff on most imports from Taiwan. This new tax, effective August 7, is part of a wider trade plan from President Donald Trump. While this 20% rate is less than the original 32% proposed on April 2, it is higher than the 15% rate applied to countries like Japan and South Korea. These nations secured lower rates by promising significant investments.

Taiwan’s Immediate Response

Taiwanese President Lai Ching-te quickly responded, stating the 20% Taiwan US tariff is not final. He emphasized that Taiwan will continue negotiations with the U.S. to achieve a reduced rate. Taiwan’s negotiating team has already conducted four in-person meetings and many video calls with their U.S. counterparts. These discussions will likely cover supply chain cooperation and a Section 232 investigation focusing on semiconductor products.

Economic Impact and Future Steps

Market Reaction in Taiwan

The announcement caused immediate concern in Taiwan’s financial markets. The Taiwan Stock Exchange opened lower, and the New Taiwan dollar became weaker. Importantly, key products such as semiconductors and information and communication technology (ICT) products, which make up over 70% of Taiwan’s exports to the U.S., are mostly exempt from this specific tariff right now. However, everyone expects a separate Section 232 ruling on semiconductors, which could have a major impact. This situation clearly shows Taiwan’s strong reliance on its semiconductor industry.

Seeking a Better Outcome

Taiwan is reportedly considering a large investment package, possibly up to US\$400 billion. The country hopes this will help secure a more favorable tariff rate, similar to the US\$550 billion from Japan and US\$350 billion from South Korea. However, opposition lawmakers in Taiwan express worries that this large investment could use up too much of the country’s foreign money and financial capacity. Some analysts believe that the 20% tariff might be the best deal Taiwan can get for now. They suggest the rate could drop if Taiwan offers more benefits or if the U.S. trade deficit with Taiwan decreases.

Vocabulary

Tariff (noun): A tax or duty to be paid on a particular class of imports or exports.
Example: “The government imposed a new tariff on imported steel.”
Impose (verb): To force (an unwelcome decision or ruling) on someone.
Example: “The city council decided to impose a ban on smoking in public parks.”
Provisional (adjective): Arranged or existing for the present, possibly to be changed later.
Example: “The agreement is provisional until both parties sign the final contract.”
Negotiation (noun): Discussion aimed at reaching an agreement.
Example: “The negotiation between the two companies lasted for several hours.”
Turmoil (noun): A state of great disturbance, confusion, or uncertainty.
Example: “The country experienced political turmoil after the election results.”
Weaken (verb): To make or become less strong or powerful.
Example: “The long drought began to weaken the crops.”
Exempt (adjective): Free from an obligation or liability imposed on others.
Example: “Students with a certain GPA are exempt from the final exam.”
Anticipated (adjective): Expected or predicted.
Example: “Everyone prepared for the anticipated storm.”
Depletion (noun): The reduction in the number or quantity of something.
Example: “The depletion of natural resources is a global concern.”
Incentive (noun): A thing that motivates or encourages someone to do something.
Example: “The company offered a bonus as an incentive for employees to work harder.”

Discussion Questions (About the Article)

What is the main reason the U.S. imposed a Taiwan US tariff on Taiwanese imports?
How does the 20% tariff on Taiwan compare to tariffs on Japan and South Korea?
What impact did the tariff announcement have on Taiwan’s financial markets?
What kind of products are currently exempt from this specific tariff?
What concerns have opposition lawmakers in Taiwan raised about the potential investment package?

Discussion Questions (About the Topic)

Why do countries use tariffs in trade, and what are the potential pros and cons?
How important are semiconductors in today’s global economy?
Do you think large investment commitments are a good way for countries to secure better trade deals? Why or why not?
How might trade disputes like this affect ordinary citizens in the U.S. and Taiwan?
What role do you think diplomatic talks play in resolving international trade issues?

Related Idiom

At loggerheads

Meaning: In dispute or disagreement; unable to agree.
Example: “The two countries remain at loggerheads over the new trade policies.”

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This article was inspired by: Times of India, August 1, 2025