Taiwan central bank sees peril in Trump tariffs

5:55 am Wednesday, November 13th, 2024

TAIPEI (Reuters) – Taiwan’s central bank warned on Wednesday that it sees peril in the proposed trade policies of the incoming administration of U.S. President-elect Donald Trump.

In a report to parliament ahead of governor Yang Chin-long taking questions from legislators on Thursday, the central bank said that if Trump follows through on his policy promises, it would escalate trade conflicts throughout the world, and stifle competition in the tech industry.

“The map of global trade is in the process of being redrawn,” the report said, “and will likely affect Taiwan’s export momentum in the future.”

The central bank said that the aggressive tariff policy Trump promised on the campaign trail would be the most impactful trade policy of the incoming administration, if implemented.

A threat by Trump, who will take office in January, to impose tariffs of 60% on U.S. imports of Chinese goods poses major growth risks for China, the world’s second-largest economy and Taiwan’s top trading partner.

Trump also floated the idea of a 10% universal tariff on all U.S. imports.

Taiwan was a target of Trump’s rhetoric in the 2024 campaign. Trump suggested that Taiwan, under threat from China which claims the island as its own territory, should pay for the protection of the U.S. and accused Taiwan of poaching the U.S. semiconductor industry.

“The new U.S. trade policies under Trump could impact Taiwan’s financial outlook through multiple channels,” the report said.

The United States last year ran a $48 billion trade deficit in goods with Taiwan, a major producer of semiconductors for clients including tech giants such as Apple and Nvidia.

The Central Bank said it will continue to monitor implementation of major changes in U.S. policies, and gradually adjust the outlook for inflation and the economy, while responding with appropriate monetary policy.

Taiwan Vice Premier Cheng Li-chun will head a working group on future trade and technology cooperation with the new U.S. government.

(Reporting by Faith Hung, Liang-sa Loh and Ben Blanchard; Editing by Toby Chopra)