There is a controversy in Taiwan over the interpretation of the reciprocal tariff imposed by the United States. According to Taiwanese media on the 11th (local time), Donald Trump, the President of the United States, stated that the 20% reciprocal tariff imposed on Taiwan since the 7th is an addition of 20% to the existing Most-Favored-Nation (MFN) rate, as explained by the Executive Yuan's Office of Trade Negotiations (OTN).
OTN stated that for Taiwanese machinery, adding the 20% reciprocal tariff to the existing MFN rate of 4.7% results in a total of 24.7%. The Ministry of Economic Affairs had already mentioned on April 4 that the reciprocal tariff from the Trump administration is added to the existing rate. Yang Zhenni, the chief negotiator for OTN, added that he explained this method in detail on April 16 and June 6.
However, Huang Guochang, the chairman of the second opposition party, the People's Party, criticized that the announcement regarding the reciprocal tariff was made in a 'dark' manner. A lawmaker from the first opposition party, the Kuomintang, pointed out that the Executive Yuan's explanation is insufficient, while some Democratic Progressive Party lawmakers argued that the government should provide more accurate information on this issue.
Taiwan's industrial sector is worried that the cost of traditional Taiwanese products will increase by more than 10% compared to Korea and Japan due to the increase in the rate of reciprocal tariffs along with exchange rate changes. As a result, it is anticipated that the price competitiveness of Taiwanese products will decline, and orders for related products may shift to competitors in Korea, Japan, and Singapore. Additionally, there are concerns that the loss of price competitiveness in Taiwan could lead to various economic issues such as unemployment.
Experts have pointed out that the difference in tariffs between Taiwan and Japan in the industrial and agricultural sectors could reach 15% to 27% due to the method of imposing reciprocal tariffs, making it difficult for Taiwanese products to compete. Consequently, concerns about 'de-Taiwanization' have also been raised.
As the controversy intensifies, Taiwan's Legislative Yuan's Committee on Foreign Affairs and National Defense plans to summon the Minister of Foreign Affairs, the Vice Minister from relevant departments, and the Deputy Chief Negotiator of OTN on the 14th to report on the interactions regarding the reciprocal tariff between Taiwan and the United States and the changes in international affairs.