Impact of US Tariff Policy on Taiwan: 11 Products Could See Price Increases, Sock Industry Calls for Government Subsidies

On April 9, 2025, U.S. President Donald Trump imposed a 104% tariff on Chinese goods and a 32% tariff on goods from Taiwan and other countries, impacting Taiwan's export and retail sectors. Costco's Taiwan branch is under pressure to raise prices on 11 items, and sock manufacturers in Changhua have been notified by American clients to halt shipments, calling on the government to negotiate tax cuts and offer subsidies. The Taiwanese government has assembled a negotiation team to travel to the U.S. for discussions, and the industry is looking forward to concrete relief measures.

Taiwan's Exports Hit, GDP May Be Reduced by 2.5 Percentage Points

According to DBS Bank senior economist Ma Tieying, the 32% retaliatory tariff imposed by the United States on Taiwan will have a significant impact on Taiwan's economy. In the worst-case scenario, Taiwan's GDP could be reduced by 2.5 percentage points, with a direct impact of about 1.7 percentage points and an indirect impact of about 0.8 percentage points due to the slowdown in the U.S. economy.

The most affected industries include computer accessories, communication equipment, and semiconductors. Computers and AI servers make up 32.7% of Taiwan's exports to the U.S. Although they have pricing power, they still face competitive pressure from countries with free trade agreements like Mexico. Although semiconductors are not included in the current tariff list, as intermediate products, they will still be indirectly affected if demand for end products declines.

Costco Faces Price Pressure on 11 Items, Taiwan Stores Respond Cautiously

In response to the new tariff policy, Costco in the U.S. has identified 11 items that could face price hikes, including:

1. Imported cheeses like Italian Parmesan and Spanish Manchego
2. Refrigerators (made in Mexico)
3. Dishwashers, microwaves, air fryers, ovens (made in China and Mexico)
4. Imported rice (Thailand, India)
5. Imported coffee (Brazil, Vietnam, Colombia, etc.)
6. Organic roasted seaweed (South Korea)
7. Edible oil (EU olive oil)
8. Imported chocolate (Switzerland, Belgium)
9. Dried mango (Cambodia)
10. Electronic products (Chinese materials)
11. Foreign dry goods and agricultural products

Costco CEO Ron Vachris stated that the company will strive to maintain price stability through global procurement advantages, supplier negotiations, and innovative strategies, with no plans for significant price increases. Costco Taiwan responded that it will continue to provide quality service and will proactively notify members of any changes.

Changhua Sock Manufacturers Face Order Obstacles, Urge Government to Subsidize Tariff Differences

In Shetou, Changhua, a major sock manufacturing hub in Taiwan, some manufacturers have received notifications from U.S. clients to suspend shipments in April. Huang Cuixia, Chairperson of the Taiwan Hosiery Manufacturers Association, pointed out that Taiwan's sock industry has an annual output value of about NT$3.2 billion, with exports to the U.S. accounting for as much as 54%. The original import tariffs ranged from 4.6% to 18%, and with the additional 32% retaliatory tariff, the total tax rate could reach up to 50%, which is almost unbearable for manufacturers with only 10% to 20% profit margins.

Huang Cuixia urged the government to quickly negotiate with the U.S. to reduce tariffs and provide subsidies for tariff differences to help manufacturers retain orders and jobs. She emphasized, "If the orders are lost, even the employees cannot be retained." She also reminded the government to avoid merely administrative procedures and verbal commitments and to provide substantial financial assistance to the industry.

Successful Transformation Case: OH9 Black Dog Grows Against the Trend

In adversity, some businesses have shown resilience. The well-known sock brand OH9 Black Dog in Changhua successfully avoided the current tariff storm by transforming to focus on the domestic market 13 years ago in response to the impact of the Korea-U.S. FTA. Founder Li Dongying noted that after a 70% decline in exports, he shifted to developing sports socks and specialty products like "Mazu socks," achieving stable growth every year. He urged the government to assist businesses in upgrading and transforming, strengthening the "Made in Taiwan" brand value, and avoiding issues of origin washing.

Government Initiates Negotiations, Industry Hopes for Concrete Actions

Facing tariff pressure, President Lai Ching-te has ordered the formation of a negotiation team, and Foreign Minister Joseph Wu and National Security Council Secretary-General Wu Zhao-xie have already gone to the U.S. to begin negotiations. Joseph Wu stated that Taiwan has been included in the U.S. negotiation list, and both sides are exchanging information. Taiwan has also proposed zero tariffs and expanded procurement from the U.S.

However, the industry generally expects the government to propose more concrete relief and subsidy measures to help businesses overcome difficulties and maintain stable Taiwan-U.S. economic and trade relations and local employment.

References

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