US President Donald Trump’s promised policies on tariffs, trade and defense, as well as his criticisms of allies, are all issues Taiwan must watch for in the coming year, analysts said after his inauguration on Monday.
Trump, who started his second term in the White House this week, has said he would impose tariffs “indiscriminately” on allies and non-allies, said Yen Chen-shen (嚴震生), a research fellow at the Institute of International Relations at National Chengchi University.
Should the president follow through on his pledges, their potential effect on Taiwan could be a cause for concern in the short term, he said.
Photo: EPA-EFE
“His approach, let’s put it this way, shows no leniency toward allies,” said Yen, pointing to Trump’s campaign promises to impose a 10 percent tariff on all global imports and a 60 percent tariff on Chinese goods.
In late November last year, Trump vowed to implement a 25 percent tariff on imports from Canada and Mexico, sparking concerns and criticism from both nations, which have a free-trade agreement with the US.
It was uncertain whether Trump would fully implement the tariffs, but in his first term from 2017 to 2021, he imposed 10 to 25 percent tariffs on steel and aluminum derivatives from Taiwan and other countries, Yen said.
National Development Council Minister Paul Liu (劉鏡清) has said Trump’s promised 10 percent global tariff would not have a significant impact on Taiwan.
Liu said the US measures could instead encourage Taiwanese companies operating in China to relocate to avoid the much higher tariffs on Chinese exports.
However, Sung Wen-ti (宋文笛), a nonresident fellow at the Atlantic Council’s Global China Hub, expressed less concern over what he described as “primarily electoral language,” casting doubt on whether those tariff pledges would materialize consistently across the board.
Whether the new US government would create exemptions for partnered countries, including Taiwan, would “give us an indicator or two about how high Taiwan is on the administration’s” list of priorities, he said.
Also on Sung’s radar are negotiations between Taipei and Washington on the US-Taiwan Initiative on 21st Century Trade — a framework covering 11 trade issues that Taiwan hopes would eventually morph into a free-trade agreement.
“I’ll be keenly watching for whether there’s still progress” on bilateral negotiations under the trade initiative, particularly the “harder-going” trade issues, he said.
He was likely referring to thorny labor, environmental and agricultural issues on which talks began in April last year under the administration of former US president Joe Biden.
They were started following the signing of a first agreement under the trade initiative, which focused on streamlining customs clearance rules and creating other conveniences for smoother trade.
However, Sung said he was “not so optimistic” about significant breakthroughs in bilateral economic ties moving forward, adding that that Trump’s “protectionist” policy might conflict with Taiwan’s heavy reliance on global trade.
Another issue that analysts and observers are watching closely is whether the Trump administration would push Taiwan to increase its defense spending to well above the NT$647 billion (US$19.75 billion) pledged by Taiwan for fiscal 2025, or about 2.45 percent of the nation’s GDP.
During his election campaign, Trump criticized Taiwan for not doing enough to defend itself against potential Chinese aggression, suggesting that Taipei should pay Washington for protection.
In an interview with the Washington Post in September last year, Trump said Taiwan should increase its defense budget to 10 percent of GDP, far higher than Poland’s 4.12 percent for last year, the highest among NATO members, or the US’ 3.38 percent.
Yen said there was no way of knowing whether Trump was serious about those comments or just trying to “intimidate” Taiwan.
“If we respond to [Trump’s demand to increase defense spending], it does not guarantee he will help us... If we do not, it will probably give him a convenient excuse to avoid intervening in the event of a conflict across the Taiwan Strait,” he said.
Sung questioned the seriousness of Trump’s comments, saying that Taiwan should continue its current policy of gradually increasing its defense budget, as it would “show good faith” to the new administration and demonstrate that Washington’s “assistance is genuinely helping Taiwan to stand on its own two feet.”
At the same time, it also serves as an indicator that Taiwan needs to build up its defense capabilities in the face of growing military threats from China, he added.
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