US President Donald Trump's reciprocal tariffs officially went into effect at noon on April 9, imposing a 32% tariff on goods from Taiwan. On April 8, Trump warned Taiwan Semiconductor Manufacturing Company (TSMC) that if it does not build US plants, it will face a 100% tariff on its exports.
TSMC had already announced on March 3 an additional US$100 billion investment in the US, pledging to construct five new chip factories in the coming years. However, Reuters reported on April 8, citing two sources, that TSMC may face a fine of US$1 billion or more in connection with a US investigation into export control violations related to a specific chip.
Despite the US's heavy tariffs on goods from Taiwan, the Democratic Progressive Party (DPP) government continues to make concessions to the US administration.
On April 6, Taiwan leader Lai Ching-te finally met with local business representatives to discuss the issue, stating that "there are no plans for retaliatory tariffs." In an 8-minute video address, Lai attempted to reassure the public by announcing a "five-point strategy" to address US tariffs, which included industrial support plans and long-term economic development initiatives. The primary focus, however, was on negotiating with the US to improve the terms of the reciprocal tariffs.
Lai also proposed forming a negotiation team to begin discussions with the US on "zero tariffs" and pledged to increase purchases of US goods to reduce the trade deficit. He suggested expanding investments in the US across industries such as electronics, petrochemicals, and natural gas, in addition to TSMC's increased spending.
On April 7, the first trading day after the Qingming Festival holiday in the Taiwan region, the stock market in Taiwan experienced a sharp decline. The market plunged by 2,000 points at the opening, breaking the psychologically significant 20,000-point threshold and setting the record for the largest opening drop in Taiwan stock market history.
Lai's approach has been met with widespread criticism in Taiwan. Kuomintang chairman Eric Chu stated that Lai's negotiation strategy is overly naive and fails to restore Taiwan's advantageous position in trade talks.
The DPP government had believed that TSMC's massive US$165 billion investment would satisfy Trump's demands. However, Taiwan not only failed to secure favorable terms but also faces a 32% tariff on its goods and the prospect of TSMC incurring a US$1 billion fine. The DPP's policy of appeasement has faced growing public backlash, with critics arguing that it places Taiwan in a more dangerous and disadvantaged position.
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