Despite the lack of formal diplomatic relations, the US is Taiwan’s most important international advocate and its main weapons source.
On April 6, Taiwan’s President Lai Qingte said his country would provide zero tariffs and not provide retaliation as the start of negotiations with the US.
Lai said Taiwanese companies will also increase their investment in the US. The comments came in response to the cleaning of import duties announced by President Donald Trump on April 2nd. Taiwan has a trade surplus with the US, with 32% tariffs on exports to the US.
However, the new tariffs will not affect semiconductors, one of Taiwan’s biggest exports.
While meeting with small business executives at his residence, Lai pointed out that Taiwan’s trade reliance on trade could make the economy difficult to deal with US tariffs, but its effects can be minimized.
“Tax negotiations can start with a ‘zero tariff’ between Taiwan and the US, and see the US-Mexico free trade agreement,” he said. Trump has said anything that is in compliance with the US-Mexico agreement is not subject to additional tariffs.
In comments provided by his office, Lai added that there will be no change in Taiwan’s business investment commitment to the US, as long as there are no plans for tariff retaliation and they are in his country’s interests.
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“In the future, in addition to increasing investments at TSMC, other industries such as electronics, information and communications, petrochemicals and natural gas will be able to increase investment in the US and deepen Taiwan-US industrial cooperation,” Lai said.
Lai added that his Cabinet is considering purchasing a wide range of agriculture, industrial and energy from the United States as his Department of Defense has provided weapons purchase plans up until now.
“All purchases are actively pursued,” he said.
Furthermore, the non-tariff barrier is a signal for the US to assess trade fairness, and Taiwan will actively resolve the non-independence barrier that it has endured for several years to smoothen trade negotiations with the US, Lai added.
Despite the lack of formal diplomatic relations, the US is Taiwan’s most important international advocate and its main weapons source.
Meanwhile, China continues to put pressure on Taiwan militarily and politically, viewing the democratically governed island as Chinese territory amid objections from Taiwan’s government.
Shortly before Trump’s tariff rollout, China announced the end of its latest war game around Taiwan.
Taiwan has survived and survived major global changes before, Lai said.
“We were able to overcome the challenges, but we were able to turn the crisis into opportunities and transform Taiwan’s economy into a newer and more resilient,” he added.
Short selling temporary curb
On April 6, Taiwan’s Financial Supervisory Board said it would impose a temporary curb on short-term sales of stocks to address potential market disruptions following Trump’s import duties, including other steps where necessary, financial regulators said in a statement.
The committee said it will limit the number of shares that can be sold, while increasing the minimum sales margin ratio, which ends April 7th and April 11th, from 90% to 130%.
Short sellers will regain the difference by borrowing stocks they expect to drop, sell, buy, and return them later.
Taiwan’s stock market will be closed on April 3rd and 4th due to holidays and will resume on April 7th. That means investors had no opportunity to deal with the new tariffs. Since Trump’s rollout, global stock markets have fallen, losing $5 trillion from the S&P 500 in two days.
The Taiwanese Financial Supervisory Board said US tariffs are “bound to creating a lot of great uncertainty for the stability of Taiwan’s capital markets.”
To monitor international financial development and domestic capital markets, the Commission coordinates measures “in a timely manner.”
“New regulations have been introduced to make it clear that speculative short selling is not welcome,” Kao Ching-Ping, assistant director of the committee’s Securities and Futures Bureau, told Reuters.
Traders said the Taiwan dollar could face substantial pressure on the US dollar on April 7 as domestic stock markets are expected to fall amid a leak of foreign capital.
The Taiwanese dollar has dropped by about 0.9% against greenback so far in 2025, with the benchmark stock index falling by 7.5% over the same period.
Reuters contributed to this report.
