Chinese Tariffs Fuel Boom in U.S. Trade With Tech Exporter Taiwan

Date: Monday, December 6, 2021
Source: The Wall street Journal

U.S. trade with Taiwan is booming, as the self-governing island cashes in on surging demand for its computer chips and lures factories back from China, where many exports to the U.S. including electronics are subject to 25% tariffs.

Taiwan is now ranked No. 8 globally in trade with the U.S., just behind the U.K. and ahead of Vietnam. It exported a record $72 billion in goods to the U.S. in the 12 months through September. That is up about 70% since 2017, the year before the Trump administration imposed the Chinese tariffs.

U.S. exports to Taiwan have climbed about 35% from pre-tariff levels to $35 billion annually, also a record, according to U.S. Census Bureau data. The increase has largely been driven by purchases of American crude oil, machinery and cars.

Expanded commerce between Taiwan and the U.S. comes as they move to strengthen their trading ties formally over the objections of Beijing, which considers Taiwan a part of its territory.

Taiwan is a major supplier of semiconductors for the U.S., and its sharp increase in exports reflects more demand for chips across many industries.

Still, the biggest trigger for the rising trade between Taiwan and the U.S. has been the tariffs on Chinese goods, which the Biden administration has kept in force.

Scores of Taiwan-based companies have shifted at least some production back from mainland China to avoid a price increase for their U.S. customers. Taiwan’s government encouraged the trend by offering the returning companies help securing land, financing construction and finding employees.

Since 2019, 243 such returning companies have been approved for relocation assistance on investments totaling more than $30 billion, according to the agency overseeing the program, InvesTaiwan.

“They knew that manufacturing was going to need to get around those tariffs somewhere,” said Andrew Wylegala, president of the American Chamber of Commerce in Taiwan. “This was a great opportunity after seeing so much outbound flow from Taiwan to China to try to recapture a part of it.”


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