Taiwanese companies encounter high tariffs and cost challenges when establishing factories in the US: Cultural differences further complicate matters.

Under President Trump's "reciprocal tariff" policy, Taiwanese companies face challenges in establishing factories in the United States, including high construction and labor costs, cultural differences and management system disparities, and supply chain breaks. Although semiconductor products are temporarily exempt, other high-value products are not, forcing companies to consider establishing factories to avoid tariffs. The experiences of companies like TSMC in establishing factories in the U.S. highlight the challenges of "Made in America" and have led to issues such as labor disputes and legal risks.

High Tariff Pressure Forces Companies to Reevaluate Their Strategies

On April 2, 2025, the Trump Administration announced a 10% baseline tariff on global imports and implemented higher "reciprocal tariffs" on countries with larger trade deficits, including Taiwan. According to U.S. trade data, Taiwan's trade deficit with the U.S. reached $73.9 billion, with total imports amounting to $116.3 billion, resulting in a deficit ratio of 63.5%, making it a key target of the Trump Administration's tariff policy.

Although semiconductor products are temporarily exempt, high-value products such as AI servers and graphics cards are not exempt. According to the Ministry of Economic Affairs, these products account for more than half of Taiwan's total exports to the U.S., with export value reaching $31.8 billion in 2024, a year-on-year growth rate of 216%. This has forced many companies to consider setting up factories in the U.S. to avoid high tariffs.

Construction and Labor Costs Several Times Higher

However, the reality of setting up factories in the U.S. is far more challenging than imagined. Shen Guorong, chairman of Heda Industrial, pointed out that after purchasing land and setting up a factory in New Mexico, the construction cost was found to be 2.5 times more than in Taiwan. For example, the cost of building a factory on 5,000 pings of land in Taiwan is about 400 to 500 million NTD, but in the U.S., it requires 800 to 1 billion NTD. In terms of labor costs, the annual salary of American employees is about $50,000 to $60,000 (approximately 1.5 million NTD), more than double that in Taiwan.

BC Financial Officer Huang Shuni also stated that although 30% of the company's revenue comes from the U.S. market, due to high wages and technical thresholds, they are currently not considering setting up factories in the U.S. Wu Chongrang, chairman of Quantor Industrial, pointed out that corporate profits come from high efficiency and low waste, and the high-cost environment in the U.S. will significantly compress profit margins.

Management Culture Differences as Hidden Costs

In addition to cost issues, differences in culture and management systems also make it difficult for Taiwanese businesses to adapt. Shen Guorong noted that in Taiwan, "everyone follows orders promptly," but in the U.S., employees leave work on time, making it difficult to temporarily allocate manpower. This cultural difference is a major challenge for Taiwanese companies accustomed to high efficiency and flexible management.

Bai Zhengzhong, chairman of Tai Wan Industrial, shared that the company had set up factories in the U.S. three times and withdrew three times, due to production cost pressures, consumer rights regulations, and recruitment difficulties. He bluntly stated, "Thinking about setting up a factory in the U.S. requires solving more problems, which seems more difficult than being subjected to high tariffs."

Regulatory and Supply Chain Disruption Risks

Strict environmental and occupational safety regulations in the U.S. also put additional pressure on Taiwanese businesses. According to analysis, U.S. regulatory standards are significantly stricter than those in China and Southeast Asia, which were once reasons for companies to relocate. Now, if they return to the U.S., companies need to readapt to high-standard compliance requirements.

Moreover, the U.S. lacks a comprehensive supply chain infrastructure. Many metal foundries and engineering processing plants have long been closed, making it difficult for companies to obtain raw materials and components locally. This is a major obstacle for Taiwan's manufacturing industry, which relies on intensive supply chain collaboration.

Labor Disputes and Legal Risks Emerge

Even the global semiconductor leader TSMC has not had a smooth experience setting up factories in the U.S. The company's wafer plant construction project in Arizona has encountered labor disputes. According to U.S. court documents, 28 employees have filed lawsuits alleging employment discrimination against TSMC, accusing the company of failing to properly handle localization issues in management and culture.

Government and Enterprises Seek Solutions

In the face of challenges, the Taiwanese government has initiated negotiations on tariffs with the U.S. and established an "Industry Emergency Response Team" to assist companies in responding to policy changes. The Ministry of Economic Affairs also stated that it will study policy tools such as electricity prices, tax incentives, and loan grace periods to stabilize industry confidence.

At the same time, companies are actively seeking alternative solutions. Some businesses choose to relocate production capacity to Vietnam, Malaysia, and other places, or negotiate with U.S. customers to adjust prices and supply models. A factory director in Vietnam, one of the top five electronics companies, admitted, "This time, we're not moving again, because no matter where we go, we'll face tariffs."

Taiwanese companies encounter high tariffs and cost challenges when establishing factories in the US: Cultural differences further complicate matters.

Key Updates

Taiwan Semiconductor Manufacturing Company (TSMC) invests $165 billion to speed up the construction of its wafer plant in Arizona, United States, to address potential US semiconductor tariffs.

Adjustment to Trump's Tariff Policy: Tech Products Temporarily Exempted, 30 Taiwanese Publicly Traded Companies Benefit

The EU is accelerating negotiations for a free trade agreement to address US tariffs, and the ECB is expected to cut interest rates in April to ease economic pressure.

The United States has temporarily exempted electronic products from tariffs, and the Secretary of Commerce has announced that tariffs on semiconductors will be imposed in one to two months.

Trump's Tariff Policy for 2025 Increases Shoe Prices: Brands such as New Balance Face Pressure from Rising Import Costs