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.

Taiwan • Business • 04/13 18:08
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.

In response to U.S. President Trump's imposition of high tariffs on foreign trade partners, the European Union has postponed imposing retaliatory tariffs on the U.S. for 90 days to create room for negotiations and has sped up negotiations on free trade agreements with several countries to lessen dependence on the U.S. The European Central Bank plans to cut interest rates on April 17 to tackle slowing inflation and sluggish economic growth. This action is intended to lessen the impact of U.S. tariff policies on the European economy and to adjust the EU's trade and monetary policies accordingly.

Key Updates

04/13 23:07

US-China Tariff War Intensifies: Trump's Policy Drives Up US Bond Yields, Taiwan's Semiconductor Industry Benefits from Rush Order Effect

President Trump of the United States announced a 145% tariff on Chinese goods and imposed a 10% reciprocal tariff on several countries, leading to an escalation in the U.S.-China trade war and causing turbulence in global markets. The yield on the U.S. 10-year Treasury bond surged to 4.59%, reaching a new high for 2023. Despite uncertainties facing the tech industry, strong demand for AI is prompting American cloud service providers to speed up their orders, benefiting Taiwan's semiconductor supply chain with a wave of urgent orders. Companies such as TSMC are benefiting, and air freight space is fully booked.

04/13 22:39

Trump's Fluctuating Tariff Policy: Electronics Subject to Separate Tariffs, U.S. Postpones Tariffs on 75 Countries for 90 Days

In early April 2025, President Trump of the United States announced the implementation of "reciprocal tariffs" on multiple countries. Subsequently, on April 11, he released a list of 20 electronic products exempt from tariffs. However, Trump denied the existence of this policy, calling it "fake news," and planned to impose "semiconductor tariffs" on these products. Meanwhile, the U.S. temporarily postponed the imposition of reciprocal tariffs on 75 countries for 90 days. This policy repeatedly triggered market fluctuations, and experts warned that investment risks in Taiwan's stock market have increased.

04/13 22:06

In 2025, the US-China trade war heats up: Trump's tariff policy impacts the global tech supply chain, TSMC sees a sudden surge in urgent orders, and France proposes European Union border quotas.

In April 2025, the US-China trade war intensified as President Trump imposed tariffs as high as 145% on Chinese goods, and China retaliated by imposing a 125% tariff on American goods. The Trump administration temporarily exempted electronic products like smartphones from tariffs, but the semiconductor industry remained affected. TSMC received urgent orders from American clients, which accelerated the construction of its US plant. The French Finance Minister suggested that the EU set up border quotas to prevent a flood of cheap Chinese goods. After some fluctuations, the Taiwan stock market showed four major bullish signals, and market sentiment stabilized.

04/13 19:07

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.

TSMC is accelerating the construction of its third-phase semiconductor fabrication plant in Arizona in response to the potential imposition of tariffs on semiconductor products by the United States, increasing the total investment to $165 billion and advancing the groundbreaking to June 2025. U.S. Secretary of Commerce Lutnik stated that individual tariffs on semiconductor products are expected to be imposed within one to two months to encourage manufacturing to return to the U.S., prompting heightened alert and responsive measures within the industry.

04/13 18:39

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

In early April 2025, President Trump of the United States announced the implementation of reciprocal tariff measures on 75 trade partners. The policy, originally set to take effect on April 9, was postponed for 90 days due to pressure, with the tariff rate reduced to 10%. On April 11, the U.S. Customs and Border Protection released a list of 20 technology products exempt from tariffs, including smartphones and computers, effective retroactively from April 5. U.S. Secretary of Commerce, Lutenik, stated on April 13 that these products would be included in the upcoming "semiconductor tariff policy." Thirty publicly traded companies in Taiwan may benefit from the exemption policy, but they should be cautious of potential policy changes.

04/13 18:08

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.

In response to U.S. President Trump's imposition of high tariffs on foreign trade partners, the European Union has postponed imposing retaliatory tariffs on the U.S. for 90 days to create room for negotiations and has sped up negotiations on free trade agreements with several countries to lessen dependence on the U.S. The European Central Bank plans to cut interest rates on April 17 to tackle slowing inflation and sluggish economic growth. This action is intended to lessen the impact of U.S. tariff policies on the European economy and to adjust the EU's trade and monetary policies accordingly.

04/13 17:06

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.

On April 13, 2025, the U.S. government announced a temporary suspension of import tariffs on 20 categories of electronic products, including smartphones, laptops, and semiconductor components, offering short-term relief for companies like Apple, Dell, and TSMC. Howard Lutnick, the U.S. Secretary of Commerce, stated that this is a transitional measure, which is expected to be integrated into a new "semiconductor tariff" framework within one to two months, aimed at encouraging manufacturing to return to the U.S. and reducing dependence on Asian supply chains.

04/13 16:38

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

At the beginning of 2025, the Trump government implemented a new tariff policy, imposing tariffs as high as 125% on footwear products imported from countries like Vietnam and China, resulting in higher costs in the U.S. footwear market. Even though brands like New Balance stress "Made in USA," price hikes are unavoidable due to their reliance on imported materials. U.S. shoe manufacturing makes up just 1% of the market, and consumer spending is expected to go up, with shoe prices generally rising by 10% to 15%. This policy is intended to encourage the return of American manufacturing, but the supply chain's dependence on Asia makes it hard to avoid cost pressures.

04/13 16:38

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.

04/13 15:36

U.S. Commerce Secretary Howard Lutnick announced new tariffs that will impact smartphones and semiconductors, emphasizing on American manufacturing and national security.

On April 13, 2025, United States Secretary of Commerce Howard Lutnick announced that smartphones, computers, semiconductors, and related electronic products will be subject to the new "semiconductor tariff" system in the next month or two. Although these products were recently granted temporary exemptions, Lutnick emphasized that the exemptions are not permanent. The purpose of the taxation is to encourage manufacturing to return to the United States and to ensure national security. This policy is tied to the Trump administration's national security investigation and may involve a tax rate of 25% or more, with specific details to be announced on April 14.

EU Temporarily Halts Retaliatory Tariffs to Allow for Negotiations

On April 9, 2025, all EU member states except Hungary unanimously supported retaliatory tariffs in response to U.S. steel and aluminum tariffs, planning to impose a 25% tariff on approximately $23 billion worth of U.S. goods. However, on the same day, U.S. President Trump announced a 90-day suspension of new tariffs on most countries, including the EU, and reduced tariffs on EU goods from 20% to a standard rate of 10%. The EU immediately announced a delay in implementing retaliatory tariffs, expressing hope to create space for negotiations.

European Commission President Ursula von der Leyen stated, "We have noted President Trump's statement, and we hope to give negotiations a chance." She emphasized that the EU's retaliatory tariff measures are ready and will be implemented in 90 days if negotiations fail.

Free Trade Agreement Negotiations Accelerate to Diversify Away from U.S. Dependence

Amid rising U.S.-EU trade tensions, the EU is actively advancing free trade agreement negotiations with multiple countries. EU Chief Trade Negotiator Maroš Šefčovič traveled to Washington on April 14 to persuade the U.S. to lower tariffs on EU exports. The EU exports a total of €380 billion to the U.S. annually, with bilateral trade amounting to €1.6 trillion, indicating the EU's significant reliance on the U.S. market.

To mitigate risks, the EU is expediting the legislative process to complete a free trade agreement with the Southern Common Market (MERCOSUR). The agreement reached a political consensus in December 2024 and is awaiting approval from EU member states. Austria, which was initially opposed, has changed its stance due to changes in U.S. tariff policies and initiated a domestic referendum process.

Additionally, the EU is actively pursuing trade negotiations with the UAE, Malaysia, Indonesia, Thailand, and India, and has begun restarting dialogue with the UK on post-Brexit trade relations. European Commission President von der Leyen noted that the EU is pivoting towards Asian markets and collaborating with members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). New Zealand Prime Minister Luxon has proposed establishing a broader trade agreement with the EU based on the CPTPP.

By the end of 2024, the total value of free trade agreements awaiting EU signature or approval exceeded €185 billion. The EU is also concerned about the potential re-export of Chinese goods into the European market and plans to hold a summit with China in July to discuss the electric vehicle supply chain and update customs cooperation agreements.

ECB Expected to Cut Rates Again to Address Economic and Inflationary Pressures

The European Central Bank is scheduled to hold a policy meeting on April 17, 2025, with widespread market expectations of another rate cut by 25 basis points, lowering the deposit rate from 2.5% to 2.25%. This would mark the seventh rate cut since June 2024. According to a Reuters survey conducted from April 7 to 9 among 71 economists, 61 expect a rate cut at this meeting, and over 70% anticipate another cut in June, bringing the rate down to 2.0%.

The ECB's rate cut comes amid cooling inflation in the Eurozone in March, downward revisions to economic growth forecasts, and the impact of U.S. tariff policies on European business confidence. The ECB has revised its 2025 economic growth forecast from 1.1% to 0.9% and its 2026 forecast from 1.4% to 1.2%. Inflation forecasts have been revised upward from 2.1% to 2.3%, still below the ECB's medium-term target.

Additionally, the euro has risen nearly 7% against the dollar since the beginning of the year, further suppressing import prices and providing the ECB with more room to cut rates. Nonetheless, internal divisions within the ECB over further easing policies have intensified. Some officials advocate caution to avoid overstimulation, while others suggest that if U.S. tariff policy remains uncertain, the ECB may need to cut rates 3 to 4 more times by the end of 2025.

Business Confidence and Investment Willingness Under Pressure

According to a Reuters survey, all 33 surveyed economists agree that U.S. tariffs have negatively impacted Eurozone business confidence, with over one-third describing the impact as "very negative." Concerns about prolonged trade conflicts have led to reduced investment, particularly in manufacturing and export-oriented industries.

Furthermore, several European governments are seeking to relax fiscal regulations to increase military and infrastructure spending, potentially changing the structural direction of European economic policy. These changes could have profound implications for economic growth in the coming years.

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