Originally published on the website of CommonWealth Magazine on 08. April 2025.
Author: Kwangyin Liu 劉光瑩
Managing Editor & English website
editor CommonWealth Magazine – Taiwan
On April 2, U.S. President Donald Trump announced a new phase of his trade war under the banner “Make America Wealthy Again,” unleashing reciprocal tariffs on over 180 countries.
The headline figures shocked many: a 54-percent total tariff rate on Chinese imports, 32 percent on Taiwanese goods — surpassing Japan (24 percent), South Korea (25 percent), and India (26 percent). Even Taiwan Semiconductor’s (TSMC) recent pledge to invest $160 billion in the U.S. did not win the company preferential treatment, leaving the business community stunned.
“People assumed Taiwan was a close ally, yet Trump hit us just as hard,” said Advantech no-founder Chaney Ho. He noted the absence of early warnings from the Taiwanese government, indicating a breakdown in communication channels with Trump’s team compared to previous administrations.
Trump’s statement left room for negotiation, saying tariffs would take effect in one week and remain “until such time as I determine that the underlying conditions described above are satisfied, resolved, or mitigated.” In other words, the 32-percent tariff rate could just be the opening bid in negotiations with Taiwan.
Tariffs as Strategy: Reciprocity, Investment, and Reindustrialization
Beyond balancing trade deficits, U.S. Commerce Secretary Howard Lutnick revealed three strategic objectives behind the tariffs: achieving fair trade, attracting investment, and reviving domestic manufacturing. He cited Europe’s ban on U.S. chicken and beef as examples of unfair practices: “They hate our beef because our beef is beautiful and theirs is weak. It’s unbelievable.”
According to Lutnick, the pressure has already secured over US$4 trillion in investment from parties including Saudi Arabia, Apple, and Hyundai. He acknowledged the risk of short-term recession, but insisted the long-term gains outweigh the cost: “These moves are reshaping global trade and reenergizing American industry.”
Southeast Asia Under Scrutiny: Targeting „Country-of-Origin Washing“
With tariffs set at 49 percent for Cambodia, 48 percent for Laos, 46 percent for Vietnam, and 44 percent for Myanmar, Southeast Asia has clearly been targeted with higher tariffs. These countries have become manufacturing hubs for Chinese firms seeking to sidestep previous trade restrictions, and are considered by Washington to serve as extensions of the Chinese supply chain.
Dr. Kristy Hsu, director of the Taiwan ASEAN Studies Center at Chung-Hua Institution of Economic Research, noted that the U.S. has repeatedly raised concerns about Chinese companies „washing“ their country of origin labels via Vietnam. According to the Asian Development Bank, nearly 80 percent of the value of Vietnam’s electronics exports comes from imported components — mostly from China. A 2024 McKinsey report shows Chinese investment in ASEAN manufacturing surged to $24 billion last year, a tenfold increase.
Vietnam has already responded, promising to remove tariffs on US imports, while Thailand has expressed readiness to negotiate. In Hsu’s view, Trump’s high tariffs are part of a bargaining strategy.
Strategic Realignment: Toward a War-Ready Economy
The trade war is not just economic, but part of a broader geostrategic shift. “This is the start of a war-preparation economy,” said Jack Chih-Yuan Hou, COO of Universal Cement. He stressed that since joining the WTO, U.S. industries such as cement, steel, and shipbuilding have been offshored or overtaken by foreign capital. Today, U.S. shipbuilding accounts for just 0.1percent of global output. China’s shipbuilding capacity is now 232 times that of the US, and its navy is projected to reach 440 warships by 2030, greatly surpassing America’s fleet.
Key industries like steel, automobiles, and semiconductors are being reclassified as strategic assets. Cars are tied to military logistics; semiconductors are the brains of modern defense. The U.S. produces only 12 percent of the world’s chips, trailing far behind Taiwan and South Korea. The pandemic exposed vulnerabilities in US access to essential resources like copper, pharmaceuticals, and timber, prompting a renewed push for shoring up the domestic supply chain.
Professor Chen Zhiwu of the University of Hong Kong notes that China is also shifting toward a “defense-driven economy.” Between 2018 and 2023, China’s defense industry index rose 41 percent, decoupling from broader stock trends, indicating a global industrial realignment.
Taiwan’s Role No Longer Unique, Supply Chain Shake-ups Expected
Trump’s tariff war is not just targeted at China, but also places Taiwan and other Southeast Asian countries within its scope, signifying that Washington is no longer extending special treatment to its traditional allies. With supply chain realignment on the horizon, Advantech’s Ho advises Taiwanese businesses to undertake a realistic assessment of their capacity for setting up US-based production. “Companies that can’t build in the US risk losing their orders to those that can,” he stated.
Trump’s strategy marks a departure from the logic of multilateralism, replacing it with bilateral negotiation and high-pressure tactics. Behind the economic leverage lie deeper, long-term national strategy considerations for geopolitical security. Taiwan’s response cannot remain purely in the business domain, but must be elevated to the level of national strategic planning.
