U.S. President Donald Trump has announced plans to impose significant tariffs on semiconductors and pharmaceuticals, aiming to encourage companies to move production from Taiwan and other countries back to the United States. Trump has claimed that such reshoring could boost the U.S. economy by as much as US$20 trillion by the end of this year, as companies relocate to avoid high tariffs.
An editorial of the Taipei Times argued that while these tariffs face potential legal challenges, Taiwan faces growing concerns about whether its domestic semiconductor operations could shrink, talent could leave, and local industries could be hollowed out. National Development Council Minister Yeh Chun-hsien downplayed such fears, telling the legislature’s Economics Committee that Taiwanese investment in the U.S. is primarily aimed at duplicating development rather than moving the core of the industry abroad. Yeh cautioned against repeating the mistakes of U.S. trade policies in the 1980s, when shifting production to Southeast Asia led to weaknesses in domestic manufacturing. He emphasized that Taiwan seeks to maintain critical and advanced manufacturing at home while helping cultivate talent and industrial capabilities abroad.
Taiwanese companies now face a complex balancing act as they weigh the risks of moving production overseas against the financial pressures imposed by U.S. tariffs. With a declining birthrate limiting the local labor pool, an accelerated relocation of manufacturing could temporarily reduce exports, cause job losses, and affect small and medium-sized enterprises, particularly in southern and central Taiwan. Yet the editorial noted that Taiwan has historically adapted to such pressures without losing its industrial core.
Industry leaders remain optimistic. Pegatron Corp chairman Tung Tzu-hsien said that previous overseas expansions have strengthened Taiwan’s global influence without hollowing out local industries, as key research, development, and decision-making remain based in Taiwan. Past waves of relocation, first in traditional industries such as plastics and textiles in the 1980s and later in information and communications technology around 2000, did not weaken Taiwan’s industrial base. Instead, they spurred the growth of new sectors, created new markets for Taiwanese goods, and helped the country maintain its competitive edge globally.
The Taipei Times editorial further argued that while broader and higher U.S. tariffs may accelerate overseas expansion this time, Taiwan has the tools to turn the situation into an opportunity. By retaining critical technologies, fostering an innovation-driven domestic environment, and expanding into the European Union and emerging markets, Taiwan can reduce dependency on a single export market. Additionally, advancements in areas such as artificial intelligence, robotics, and other high-tech industries may allow Taiwanese firms to outpace the pace of relocation, creating new growth prospects and strengthening the country’s industrial resilience. The editorial concluded that strategic policymaking and investment in innovation could transform the current challenges posed by U.S. tariffs into a long-term competitive advantage for Taiwan.
