Trump's tariff policies have severely impacted the Taiwanese-invested textile industry in Vietnam, and businesses are urging the Taiwanese government to negotiate for tariff reductions.

On April 9, 2025, U.S. President Donald Trump initiated the "Reciprocal Tariff" policy, imposing tariffs of 46% on goods from Vietnam and 54% on goods from China. This severely affected Taiwanese textile manufacturers with factories in Vietnam, leading to order cancellations, shipment delays, and factory shutdowns. The industry is urging the Taiwanese government to speed up negotiations with the U.S. to negotiate for tariff reductions or relief measures to ease the burden on the supply chain.

Background of Trump's Tariff Policy: Reciprocal Tariffs Fully Rolled Out

On April 2, President Trump signed an executive order announcing the implementation of a "reciprocal tariffs" policy on multiple countries worldwide, imposing punitive tariffs on countries that have trade deficits with the United States. According to the policy, Vietnamese goods will be subject to a 46% tariff, while Chinese goods will face a 54% tariff. The Trump administration accuses Vietnam of dumping, currency manipulation, and assisting China in re-exporting, emphasizing that even if Vietnam proposes a zero-tariff negotiation plan, it is insufficient to warrant concessions from the U.S.

Peter Navarro, a senior trade advisor at the White House, stated that Vietnam has long gained trade advantages through non-tariff means, causing a severe deficit for the U.S., and merely reducing tariffs cannot solve the fundamental problem.

Taiwanese Textile Factories Hit Hardest: Order Cancellations and Factory Shutdowns

Taiwanese textile companies with factories in Vietnam are hit hardest. According to a report by TVBS News Network, an anonymous Taiwanese textile factory owner in Vietnam noted that even before the tariff policy officially takes effect, customers have begun canceling orders or requesting shipment delays. Since products exported to the U.S. face a cost loss of up to 40% once shipped, many factories have chosen to suspend production, with some even shutting down to minimize losses.

The owner stated, "Although it's a national holiday in Vietnam these days, and the full impact hasn't been reflected yet, a wave of order cancellations is inevitable. If customers didn't anticipate the tariff changes when placing orders, they will inevitably request cancellations or shipment delays."

Additionally, 2 to 3 Taiwanese factories in Vietnam's industrial zones have already halted operations due to tariff uncertainties, with some newly built plants becoming "ghost factories," unoccupied and with no recruitment, leading to a complete halt in overall investment plans.

Narrow Profit Margins in Traditional Industries Make Absorbing Tariff Costs Difficult

Taiwanese textile companies generally point out that the textile and garment industries have narrow profit margins, making it difficult to absorb high tariffs. If brand customers cannot fully bear the costs, and factories are unable to share the burden, they ultimately have no choice but to halt production or relocate.

One industry insider admitted, "For high-value-added products, absorbing tariff costs within 10% is manageable, but for low-profit products, this wave of tariffs leaves no escape."

Some companies are even considering shifting production capacity back to China. Although China also faces high tariffs, it has lower raw material costs, a complete supply chain, and high labor efficiency, making its overall production conditions still competitive.

Response and Appeals from the Taiwanese Government and Industry

In response to the sudden impact, Taiwan's Executive Yuan has activated a response mechanism. The Executive Yuan recently announced an "Export Supply Chain Support Program" totaling 88 billion NTD, covering nine areas including export loans, R&D subsidies, and transformation and upgrading. However, industry feedback indicates that the measures have not yet been concretely implemented, and the details of actual execution remain unclear.

Chang Shih-yu, a standing director of the Taiwan Machinery Association, pointed out, "The government's 88 billion support program has yet to show implementation methods, and companies can only rely on themselves for now." He also urged the government to relax the criteria for aid applications and adopt flexible recognition to prevent relief from becoming a formality.

Additionally, industry players hope the government can expedite negotiations with the U.S. to seek tariff reductions or delayed implementation. The Vietnamese government formally requested a delay of at least 45 days in tariff implementation on April 5, proposing zero tariffs as a negotiation basis, but the U.S. has yet to respond positively.

Southeast Asia No Longer a Tax Haven: Taiwanese Business Layouts Set Back

Since the U.S.-China trade war in 2018, Taiwanese companies have been shifting production capacity from China to Vietnam, Indonesia, Cambodia, and other places, hoping to avoid U.S.-China tariff impacts. However, the U.S.'s reciprocal tariffs policy this time covers a wide range, with Southeast Asian countries facing tariffs as high as 32% to 49%, rendering the original tax avoidance layouts futile.

An analyst noted, "This is a comprehensive taxation, and Southeast Asia is no longer an immune zone, but rather the core of a new wave of impact." Traditional industries such as textiles, footwear, and garments, due to thin product margins and low brand bargaining power, find it difficult to pass on tariff costs, leading to a sharp increase in operational pressure.

Industry Observing, Hoping for Government Negotiation

Currently, most Taiwanese textile factories are in a holding pattern, awaiting clarity on U.S. policy. Some companies have begun evaluating shifts to markets in Europe, Japan, Australia, or exploring new production bases in South Asia and Africa, but rapid adjustments in the short term are challenging.

Industry players generally urge the government to actively negotiate with the U.S. for fair tariff treatment and provide concrete and feasible industry support measures to help businesses overcome the current difficulties.

References

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