Since President Trump announced the tariff wave across the globe, Alex Tan has been preparing for a rocky era with dozens of workers at a lathe factory in central Taiwan. His business, like all export-dependent manufacturers in Taiwan, could be hit hard.
The 90-day suspension on most of Trump’s tariffs gave some breathing space for Taiwan and much of the world. For now, Taiwan faces 10% tariffs on many of its products, not the 32% that Trump threatened. The fact that China, the China that became the giant manufacturing rival and ruler of Taiwan, suffered a 145% tariff, may seem like an opportunity. But it could cause its own aftershock for Taiwanese exporters.
Taiwan needs to be agile to deal with a new era of global trade turmoil, including the possibility that Trump could raise tariffs again, Tan said. His business, Aegis CNC, does not export directly to the US, but many customers of its precision manufacturing tools are factories in Taiwan and Southeast Asia.
“Some US traders buying from Taiwan “requested the supplier to hold orders,” while trying to figure out what was going to happen,” Tan said in the workshop, a green corrugated shed surrounded by rice fields. “That’s a burden, this uncertainty for Trump.”
During a two-day interview in Central Taiwan, the island’s manufacturing center, other business owners reflected that sentiment. Tariffs are one cost, and uncertainty is another cost. And they could face a massive flood of competition from Chinese exporters, priced from the US market by tariffs and seeking customers elsewhere. Taiwan’s president, Rai Qingte, visited Taihin, the central city on Friday to discuss the impact of tariffs with manufacturers.
Taiwan is known for its most advanced chip-making semiconductor plants in the world. These are important to American tech companies, and are therefore exempt from tariffs by Trump. However, Taiwan has around 23 million people and produces a large number of consumer goods in stock at American stores. Bicycles, auto parts, kitchen appliances, stationery, and even lacrosse sticks. They also manufacture many of the factory flooring machines that create their products in Taiwan or elsewhere in Asia.
Many Taiwanese manufacturers are small and medium-sized businesses like Tang’s company. This makes a precision lathe that cuts, grinds and drills metal or other material lumps into product parts.
“Taiwanese companies thrived on a small scale and very modest basis without debt,” said Alicia Garcia Herero, chief economist in the Asia-Pacific region at investment bank Natixis. “But in many cases they haven’t expanded. This is very different from mainland China.”
Taiwanese manufacturers said Trump’s tariffs were just the latest shock they’ve endured in recent years. Others included the COVID crisis. Especially the slow growth of Europe after Russia’s invasion of Ukraine. And perhaps more than anything, there is a surge in exports from China.
Most people said they could handle Trump’s 10% tariffs on Taiwan. As American importers are looking for alternatives to China, we have predicted some forecast opportunities. But many were worried that the uncertainty and wider price pressure created by Trump’s tariffs could drive orders far beyond the US.
“It’s like a typhoon,” said Catherine Yen, sales manager at Ejis CNC, about the trade turmoil. She said she spent the day trying to hit new orders in the Middle East and elsewhere. “The eyes of typhoons have a direct and immediate effect on exports to the US, but in reality there is also a wide circle (upstream and downstream connection) from the swirls around us, which is frightening.”
The American flag flies along with the Taiwanese flag on top of Henry Yang’s company in Taiwan. The company exports valves, faucets, pipes – plumbing products (valves, faucets, pipes) to the US.
Yang said he sympathized with Trump’s goal of reviving American manufacturing, but wondered how long the US would take to recruit and train workers for sophisticated and demanding manufacturing. Even in Taiwan, he said it’s becoming harder to find young people willing to work in factories. (Many Taiwanese plants employ migrant workers from Southeast Asia.)
“I think manufacturers certainly have to absorb some of that, and importers also spoke about the new 10% tariffs on many Taiwanese products. He said of Trump:
Yang, 73, is from Lukan, a town known for producing plumbing products. He turned that background into business and filled orders from the US and elsewhere by utilizing a wide network of manufacturers for parts.
The formula is very useful in Taiwan. For decades, small and medium-sized manufacturers have opposed the expectations that large Chinese competitors will overwhelm them. Instead, they learned to use flexibility and network to address customer needs and develop a bond of trust with overseas buyers.
“Taiwan’s strength lies in small orders and many options,” said Jack Lee, chairman of 7Leaders Corp. “Mainland China may be catching up, and there are some companies that are competitive with us, but what if tariffs keep us out of the US?”
According to government statistics, Taiwan employs around 2 million workers, about 2 million workers, and there are around 144,000 small and medium-sized businesses in the manufacturing sector. However, these companies often make parts for larger Taiwanese exporters and disguise the real scale of their contributions.
“It has a very decentralized and flexible production and supply network that allows us to supply many different customers. It is the main source of competitiveness,” says Michel Fussier, a sociologist at the research academy that studies the role of small Taiwanese companies in creating Buisel and other products. “They often talk about providing their customers with very specific manufacturing services solutions.”
Taiwanese manufacturers with markets in Europe and elsewhere said they were worried that Chinese competitors would try to weaken them even more violently, perhaps helped by state subsidies. Meanwhile, Samuel Who said companies like him are looking for new customers in the US. Hu is the president of Astro Tech, Central Taiwan, which manufactures high-end e-bikes and bicycle frames primarily for retailers in Europe.
“For Taiwanese manufacturers, this is also an opportunity to enter the US market,” Hu said. Some potential US clients have contacted him even before Trump’s election, and he said the number of investigations is growing.
