The US-Taiwan tariff deal proved to be favorable for Taiwan, experts say

Experts argue that the newly finalized US-Taiwan tariff agreement highlight not only immediate relief for Taiwanese industry but also the potential for stronger long-term economic integration and innovation.

Dr. Sun Ming-te (孫明德), Director of the Macroeconomic Forecasting Center at Taiwan Institute of Economic Research (TIER) said at a press conference on Jan. 26 that according to TIER's latest survey of Taiwanese businesses, the proportion of those who are optimistic about the current economic situation, whether for the current month or the next six months, has consistently increased across all three major sectors: Manufacturing, service, and construction.

He further stated that as the uncertainty surrounding Trump's reciprocal tariff diminishes, Taiwanese businesses have recovered from the significant blow to the export industry which happened in April 2025, and their optimism about the economy has returned.

Lai frames tariff deal as positive economic opportunity

Speaking at the 2026 CommonWealth Economic Forum on Jan. 22, President Lai Ching-te (賴清德) recalled that in April 2025, US President Donald Trump announced the imposition of the reciprocal tariffs, citing Taiwan's trade surplus with the United States, which reached US$73.9 billion in 2024.

At the time, Washington signaled that Taiwan could face tariffs of up to 32%, triggering concern both domestically and abroad that Taiwan, an economy heavily reliant on trade, might struggle to navigate the resulting shock.

Lai said those fears have since proven misplaced. Rather than remaining trapped by the tariff threat, Taiwan has not only emerged from the impasse but secured more favorable conditions.

He attributed the outcome to what he described as a comprehensive government strategy that assessed Taiwan's strengths and vulnerabilities, incorporated an understanding of US policy priorities, and took into account competitive dynamics with neighboring economies.

Under that approach, the originally proposed 32% reciprocal tariff was first reduced to a temporary 20% rate, before being further lowered to 15% on a non-stacking basis. The final arrangement, Lai noted, places Taiwan on equal footing with key competitors such as Japan, South Korea and the EU, creating what he called a great opportunity for Taiwanese enterprises.

Lai added that despite global uncertainty, Taiwan recorded economic growth of 7.37%, the highest in 15 years, while maintaining strong trade relations with major partners including the US, the UK and Southeast Asia.

Taken together, he said, these developments represent a positive inflection point for Taiwan's economy and underscore its capacity to turn external pressure into new opportunities.

Vice Premier Cheng Li-chiun (鄭麗君) who was in charge of Taiwan's negotiations with the US government also told the press that the breakthrough in tariff negotiations hinged on the “Taiwan model” which is a framework that successfully reframed Washington's push to revive domestic manufacturing into a platform for bilateral cooperation.

She noted that the US has sought to rebuild its own chip supply chains, using higher tariffs as leverage to encourage foreign firms to invest on American soil. Taiwan, she said, countered with a proposal centered not on relocation, but on partnership.

Addressing concerns that expanded overseas investment could dilute Taiwan's so-called “silicon shield,” Cheng stressed that the strategy should not be viewed as industrial hollowing-out. “This is about building, not moving,” she said, underscoring that the core of Taiwan's semiconductor industry and supply chain would remain firmly anchored at home, even as companies expand their global footprint through carefully structured cooperation with the United States.

Experts' positive reactions to the deal

Professor Chen Fang-yu (陳方隅), an associate professor at Soochow University, told TCN that the deal is positive for Taiwan. He said that the US$250 billion investment figure reflects autonomous capital expenditure by Taiwan's semiconductor industry, rather than government outlays.

He stressed that the funds represent investments companies had already planned under normal commercial operations, not budgetary spending by the Taiwanese government.

Chen noted that TSMC alone has announced investment plans totaling US$165 billion in the US, an amount that the US Secretary of Commerce has confirmed is included within the broader US$250 billion figure.

He explained that TSMC's decision to expand in the US is driven primarily by market realities: More than 70% of its customers are American, and company chairman C.C. Wei (魏哲家) has been explicit that existing capacity remains insufficient, requiring at least a threefold expansion.

Chen said that it is a rational outcome of corporate assessment for TSMC to expand overseas including in the US, shaped by both commercial and political considerations. Crucially, he emphasized, the investments are financed by private enterprises based on long-term strategic planning, not by public funds.

Miula Hung (洪岳農), a Taiwanese entrepreneur and business podcaster, also described the negotiation outcome as favorable in his podcast. He said that by committing US$250 billion in investment, Taiwan succeeded in avoiding the stacking of the 15% reciprocal tariff and secured preferential treatment under Section 232, conditions he argued are more advantageous than those offered to Japan and South Korea, particularly given that Taiwan runs the largest trade surplus with the United States among the three.

Addressing domestic criticism that Taiwan had “given up too much” by pairing investment commitments with government-backed credit guarantees, Hung likened the concern to conflating a purchase with a loan guarantee. “If you commit to buying a US$10 million home, and your parents guarantee a loan of the same amount should you need it,” he said, “does that mean the house costs US$10 million or US$20 million?”

Chris Cottorone, the Co-Chair of Private Equity Committee at AmCham Taiwan, wrote on his LinkedIn that it is a positive development for US and Taiwan to have their economic and investment ties closer and clearer, for both sides'  futures.

He wrote that from his experience dealing with different stakeholders, the 15% rate is lower than what many feared, and along the lines of Japan and South Korea.

Caveats and nuances to pay attention to

Yang Kuang-shun (楊光舜), co-founder of the NGO US-Taiwan Watch, said to TCN that even if the trade agreement is widely regarded by experts as economically sound and well received by markets, it does not automatically translate into political capital for Taiwan's ruling authorities.

Yang pointed to Taiwan's experience during the COVID-19 pandemic as a telling example. He stated that pandemic governance was long viewed as the policy area most likely to generate political dividends for the Democratic Progressive Party (DPP); yet when the crucial figure overseeing the pandemic command system later ran for mayor of Taipei, the candidate was defeated, and the party suffered significant losses in local elections.

The episode, Yang argued, illustrates how political capital accumulated in a single policy domain does not readily convert into electoral success. He added that since the structure of the US-Taiwan trade agreement is considerably more complex, and its costs and benefits are even less accessible to broad segments of the electorate, it remains far from certain whether the deal can be framed or perceived as a political victory for the DPP.

Jason M. Kuo (郭銘傑), an associate professor at National Taiwan University, wrote on social media that Taiwanese investment is increasingly embedded within the logic of US domestic law and national security policy. Kuo argued that investment has evolved into a form of “obligated behavior,” rather than a purely profit-driven choice.

While Taiwanese semiconductor firms remain market actors in form, he said, the range of feasible options has been institutionally reshaped by the United States. This dynamic, he argued, helps explain the central role of Section 232, which he described as no longer merely a punitive tariff tool invoked under national security grounds, but a highly calibrated mechanism of “behavior-based pricing.”

Under this framework, Kuo stated, whether companies invest, how much they invest, and whether projects are completed on schedule are translated directly into differentiated tariff outcomes, transforming tariffs from a tool of ex-post punishment into one of ex-ante governance.