Alex Tang held a morning inspiration with more than a dozen workers at his lathe manufacturing plant in central Taiwan to prepare them for the Rocky era ahead since President Trump announced the wasting of global tariffs. Like all Taiwan's manufacturers that rely on exports, his business could be hit hard.
Mr. Trump's 90-day pause on most tariffs gives Taiwan and around the world some breathing space. Currently, Taiwan faces 10% tariffs on many of its products, rather than 32% threatened by Mr. Trump. The fact that Taiwan’s huge manufacturing rival and possible ruler China has been hit by the 145% tariff seems to be an opportunity. But this may cause aftershocks for Taiwanese exporters.
Don said Taiwan needs agility to cope with a new era of global trade disruptions, including the possibility of Mr. Trump raising tariffs again. His business, AEGIS CNC, is not exported directly to the United States, but many of the customers’ precise manufacturing tools are factories in Taiwan and Southeast Asia.
“Some American traders who bought from Taiwan have put on hold and asked suppliers to put orders on hold,” Mr. Tang said in his workshop, while they were trying to figure out what might have happened. “It’s a burden, and this uncertainty is due to Trump.”
In the heart of the island’s manufacturing heartland within two days in central Taiwan, other business owners responded to the sentiment: tariffs are one cost and uncertainty is another. They may face a lot of competition from Chinese exporters, priced from the U.S. market through tariffs and seek customers elsewhere. Taiwan's president Lai Ching-te visited the central city of Taichung on Friday to discuss the impact of tariffs with manufacturers.
Taiwan is known for its semiconductor plants, the most advanced fries in the world. These are subject to Mr. Trump's tariffs for their importance to American technology companies. However, Taiwan has about 23 million people and also produces many consumer goods that store American stores – bicycles, auto parts, kitchen utensils, stationery, and even lacrosse sticks. It also manufactures many factory-based machines that create these products in Taiwan or elsewhere in Asia.
Many Taiwanese manufacturers are small and medium-sized enterprises, such as Mr. Tang's company, which produces precise lathes that can be cut, grind and drilled into metal or other materials into product parts.
“Taiwanese companies are still small and frugal and have no debt,” said Alicia García Herrero, chief economist at investment bank Natixis. “But usually they don't scale up, which is very different from mainland China.”
Taiwanese manufacturers say Mr Trump's tariffs are just the latest shock they have suffered in recent years. Others include crisis; Europe's staggering growth, especially after Russia's invasion of Ukraine; and, most importantly, a surge in China's exports.
Most said they could deal with Mr. Trump's 10% tariff on Taiwan. Some forecast opportunities are US importers looking for alternatives to China. But many are concerned that the uncertainty arising from Mr. Trump’s tariffs and greater price pressures could drive orders far beyond the United States.
“It’s like a typhoon,” Catherine Yen, sales manager at Eggis CNC, said of the trade turmoil. She said she has spent a lot of time trying to make new orders in the Middle East and elsewhere. “The eyes of the typhoon are directly impacting the immediate impact of U.S. exports, but in fact, there are wider circles in that rotation around us (the connection between upstream and downstream) – which is a terrible thing.”
An American flag is flying with Taiwan's Henry Yang's company in Taichung. The company exports pipe products – valves, faucets, pipes – to the United States, an example of the close bond many Taiwanese exporters form with their U.S. customers.
Mr. Yang said he sympathized with Mr. Trump's goal of restoring U.S. manufacturing, but wanted to know how long it would take the U.S. to recruit and train workers to obtain refined, demanding manufacturing jobs. He said that even in Taiwan, it is difficult to find young people who are willing to work in factories. (Many Taiwanese plants employ migrant workers from Southeast Asia.)
Mr. Yang said of the new 10% tariffs on many Taiwanese products: “I think manufacturers must absorb some of them, and importers will absorb them too.” He said of Mr. Trump: “If you ask me about my personal opinion, I think he has a reason to do so because the United States has been hollowed out.”
Mr. Yang, 73, is from Lukang, a town known for producing pipeline products. He turned this background into a business, filling orders in the United States and elsewhere by leveraging a network of parts manufacturers.
This formula serves Taiwan very well. For decades, small manufacturing companies have violated expectations that Chinese competitors will be overwhelmed. Instead, they learn to adapt, leverage their flexibility and network to meet customer needs, and build trust with foreign buyers.
7-Leaders Corp. Chairman Jack Lee said: “Taiwan’s strength lies in making small orders and many choices. “Mainland China may be catching up and there are some companies that compete with us, but what if they are turned away by tariffs? ”
According to government statistics, Taiwan has about 144,000 small and medium-sized enterprises in its manufacturing industry and employs about 2 million workers, who directly account for 12% of the island's manufacturing exports. However, these companies often make parts for large Taiwanese exporters, thus hiding the true scale of their contributions.
“With its highly fragmented, highly flexible production and supply network, they can provide many different customers. This is the main source of their competitiveness,” said Michelle Hsieh, a sociologist at the College of Research. “They often talk about providing manufacturing service solutions that are very specific to customers. ”
Manufacturers that have markets in Europe and elsewhere say they fear Chinese competitors will weaken them more fiercely, perhaps with help from state subsidies. Samuel Hu, on the other hand, said companies like him would seek new customers in the United States, and Mr. Trump's tariffs could leave Chinese imports far away. Mr. Hu is the president of Astro Tech in central Taiwan, which manufactures high-end electronic cycling and bicycle racks for retailers, mainly in Europe.
“For Taiwanese manufacturers, this is also an opportunity to enter the U.S. market,” Hu said, saying that even before Mr. Trump was elected, some potential U.S. customers were contacting him and the number of inquiries was increasing.
