China Tariffs Fuel US-Taiwan Trade Boom

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Josh Zumbrun (in Washington) and Stephanie Yang (in Taipei), China Tariffs Fuel US-Taiwan Trade Boom; Commercial ties with key tech exporter grow despite objections from China. Wall Street Journal, Dec 6, 2021, at page A7.
https://www.wsj.com/articles/us-china-taiwan-trade-11638663970

Note:
(a) "Since 2019, 243 such returning companies have been approved for relocation assistance on investments totaling more than $30 billion, according to the agency overseeing the program, InvesTaiwan."
(i) InvesTaiwan 投資臺灣入口網 is not an agency. See InvesTaiwan, undated
https://investtaiwan.nat.gov.tw/ ... ch=serviceCenter_07
("Inter-Ministerial Organization[:] InvesTaiwan has been launched, and will work to coordinate and integrate the government’s support services for investment. This office is at the top of a pyramid structure that includes the InvesTaiwan Service Center, the Investment Commission (20 ministerial members) and the Department of Investment Services (24 main overseas units)" )
(ii) Its CEO is Emile MP Chang 張銘斌.
https://investtaiwan.nat.gov.tw/ ... g&search=dois01
(Educational Background
Edinburgh University (Scotland): Master of Laws
Harvard University (USA): Executive Leadership Program")

(b) Inthe print, the figure is black and white, with top zigzag line labeled "Imports" and lower, "Exports."
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US trade with Taiwan is booming, as the self-governing island cashes in on surging demand for its computer chips and lures factories back from China, where many exports to the U.S. including electronics are subject to 25% tariffs.

Taiwan is now ranked No. 8 globally in trade with the US, just behind the UK and ahead of Vietnam. It exported a record $72 billion in goods to the U.S. in the 12 months through September. That is up about 70% since 2017, the year before the Trump administration imposed the Chinese tariffs.

US exports to Taiwan have climbed about 35% from pre-tariff levels to $35 billion annually, also a record, according to US Census Bureau data. The increase has largely been driven by purchases of American crude oil, machinery and cars.

Expanded commerce between Taiwan and the US comes as they move to strengthen their trading ties formally over the objections of Beijing, which considers Taiwan a part of its territory.

Taiwan is a major supplier of semiconductors for te US, and its sharp increase in exports reflects more demand for chips across many industries.

Still, the biggest trigger for rising US-Taiwan trade has been tariffs on Chinese goods, which the Biden administration has kept in force.

Scores of Taiwan-based companies have shifted at least some production back from mainland China to avoid a price increase for their US customers. Taiwan encouraged this trend by offering companies help [which is a noun, not verb] securing land, financing construction and finding employees.

Since 2019, 243 such returning companies have been approved for relocation assistance on investments totaling more than $30 billion, according to the agency overseeing the program, InvesTaiwan.

"They knew that manufacturing was going to need to get around those tariffs somewhere," said Andrew Welgala, president of the American Chamber of Commerce in Taiwan.

Taipei-based JC Grand Corp [俊良貿易 (股份有限公司)], which makes construction fasteners and metal hardware sold in the US at Home Depot, Lowe's and other stores, is among the manufacturers shifting production to Taiwan from China.

For 20 years, about half of JC Grand's products were made in China's Zhejiang Province. As it looked to expand operations, Taiwan offered incentives that lowered the cost of buying factory equipment, said John Hodwani [an American; the company seems American-owned], general manager.

Ultimately, however, it was the tariffs on products made in China that proved the deciding factor, Mr Hodowany said.

"Our idea was to do the initial investment in China," Mr Hodowany said. "he tariffs just sort of put the nail in the coffin." Most of JC Grand's exports to the US now come from Taiwan, he said.

Other factors have drive increased exports from Taiwan including the huge demand for personal computers, electronic equipment and the semiconductors that power them as the Covid-19 pandemic forced many workers to set up operations at home.

Among companies relocating operations from China to Taiwan, more than 70% are in the electronics industry, according to an estimate from InvesTaiwan Chief Executive Emile Chang.

While incentive program ends this year, Mr Chang said he is considering extending the program for up to three more years as rising cross-strait tensions have put strain on some Taiwanese companies operating in China.

Taiwan's government has also sought to deepen its economic ties with the US as a bulwark against potential Chinese aggression.

Taiwan's democratically elected President Tsai Ing-wen has actively sought a free trade deal with the US. Earlier this year, the Biden administration revived direct negotiations with Taipei, holding the first formal talks in five years.

Liu Bingyu, a spokesman for the Chinese Embassy in Washington, said the US should abide by the one-China principle, which holds that there is only one Chinese government and that Taiwan is a part of China.

Under its own one-China policy, the US acknowledges Beijing’s view on the status of Taiwan but doesn't take a position on its validity.

"We firmly oppose any form of official and military contacts between the US and Taiwan, and oppose US interference in China's internal affairs," Mr Liu said.

Joanne Ou [歐江安], a spokeswoman for the Taiwan's Ministry of Foreign Ministry, said the increase in US-Taiwan trade highlights the two sides’ common interests.

Much of the rise in US exports to Taiwan has come from stepped-up purchases of crude oil as the US became a net exporter and as Taiwan refiners sought to diversify away from primarily relying  ​on supplies from the Middle East.

For the US, semiconductor sales make up the biggest category of imports from Taiwan and have been climbing rapidly. Chips are in such high demand for use in products including automobiles, appliances and videogames that there have been global shortages across industries. The US, along with much of the world, is dependent on Taiwan to boost their supplies.

Taiwan Semiconductor Manufacturing Co, one of the world's largest and most advanced chip makers, has been at the center of the surging demand for microchips. Earlier this year, the company said it would spend $100 billion over the next three years on research and development and production expansion.

To mitigate concerns that the US might become too reliant on Taiwan's chips, officials in Washington have sought to bring some overseas manufacturing to the USs, where Intel Corp, TSMC and Samsung Electronics Co are building multibillion-dollar factories.

That process will take years, however. Ryan Haas, a senior fellow at the Brookings Institution, said Taiwan's role in chip production points to even closer ties with the UD ahead.

"Taiwan matters in its own right," Mr Haas said. "The Biden administration needs to deepen the relationship in substantive ways."