Taiwan-U.S. trade talks focus on taxes on alcohol and goods: The U.S. is calling for transparency and fair competition in the system
After President Trump of the United States announced a 32% reciprocal tariff rate on Taiwan, trade negotiations between Taiwan and the U.S. have heated up, with alcohol taxes emerging as a central issue. The U.S. questions the differing tax standards for imported and local alcoholic beverages in Taiwan, calling for transparency and fair competition. Taiwan's Ministry of Finance provided import data to support the negotiations. Local netizens are skeptical about whether tax reductions will be reflected in consumer prices and are worried about potential monopolies by middlemen.
Key Updates
04/23 07:06
Taiwan-U.S. trade talks focus on taxes on alcohol and goods: The U.S. is calling for transparency and fair competition in the system
After President Trump of the United States announced a 32% reciprocal tariff rate on Taiwan, trade negotiations between Taiwan and the U.S. have heated up, with alcohol taxes emerging as a central issue. The U.S. questions the differing tax standards for imported and local alcoholic beverages in Taiwan, calling for transparency and fair competition. Taiwan's Ministry of Finance provided import data to support the negotiations. Local netizens are skeptical about whether tax reductions will be reflected in consumer prices and are worried about potential monopolies by middlemen.
Alcohol Tax Becomes a New Focus in Negotiations: U.S. Questions Tax Discrepancies
On April 23, 2025, during the Legislative Yuan's Finance Committee review of the draft amendment to the Goods Tax Act, Deputy Minister of Finance Li Qinghua confirmed that in bilateral tariff negotiations, the U.S. has expressed significant concern over Taiwan's alcohol tax system, in addition to the automobile commodity tax. The U.S. pointed out that there is a notable difference in the tax standards for imported distilled spirits and locally produced cooking rice wine in Taiwan, which may constitute unfair treatment of foreign alcoholic beverages.
According to the "National Trade Estimate Report" released by the United States Trade Representative (USTR) in March 2025, the U.S. demands that Taiwan ensure the tax rate on imported alcoholic beverages is not higher than that on domestic alcoholic beverages and emphasizes the elimination of any form of non-tariff barriers. Li Qinghua stated that the Ministry of Finance has provided data on the quantity and tax rates of imported alcoholic beverages to the Executive Yuan's Office of Trade Negotiations as a reference for negotiations.
Concurrent Review of the Goods Tax System: Considerations for Car Tax Rates and Industry Transformation
In addition to alcohol taxes, the U.S. has also raised concerns about Taiwan's automobile commodity tax system. Currently, Taiwan imposes a 25% commodity tax on passenger cars with an engine displacement of 2000cc or less, 30% on those above 2001cc, and 17% on motorcycles. Although this tax system applies equally to domestic and imported vehicles, the overall tax burden remains higher than in the U.S. when tariffs are included.
Li Qinghua pointed out that the automobile tariffs were originally a commitment made by Taiwan when joining the World Trade Organization (WTO), gradually reduced from the original 29% to the current 17.5%. Whether to further reduce them requires consideration of the domestic automotive industry's critical transition from fuel vehicles to electric vehicles. A hasty reduction could affect the stability of domestic car manufacturers and the component supply chain.
U.S. Focus on System Transparency and Market Channel Competition
On the issue of alcohol taxes, the U.S. is concerned not only with the tax rates themselves but also emphasizes system transparency and fair competition in market channels. According to Legislator Chen Yuzhen, citing the USTR report, the U.S. believes that Taiwan's current system may set discriminatory thresholds for imported alcoholic beverages and urges Taiwan to take concrete measures to ensure that foreign alcoholic beverages can enter the market under fair conditions.
Li Qinghua responded that the Ministry of Finance will study the non-tariff barrier items raised by the U.S. and emphasized that there is currently no clear direction for adjusting alcohol taxes. All policy changes will align with the Executive Yuan's negotiation strategy and overall industry policy considerations.
Public Skepticism on Whether Tax Reductions Will Reflect in Prices
Beyond policy discussions, the public in Taiwan is highly concerned about whether tax reductions will actually lead to lower consumer prices. Some netizens on social media pointed out that after New Zealand implemented zero tariffs on fresh milk, retail prices did not decrease, questioning whether a reduction in alcohol taxes would become another opportunity for importers to profit.
Some netizens bluntly stated, "Zero tariffs, yet the price remains the same, just look at fresh milk," and "Taiwanese merchants set their own prices." Others noted, "Tax reductions don't necessarily have to reflect in prices; the key is whether monopolies can be broken." Another viewpoint suggests that system transparency and channel competition are crucial, and tax rates are merely superficial.
Additionally, some netizens pointed out that distilled spirits like whiskey already enjoy lower tax rates, and the real impact is on imported grain-based spirits like wine and sake. The market channels and price structures for these items in Taiwan are more complex, and whether they can benefit from tax reductions remains to be seen.
Ministry of Finance's Position: Providing Data to Support Negotiations, No Adjustment Direction Yet
Facing pressure from the U.S. and domestic public opinion, the Ministry of Finance emphasized its role in providing data and offering policy recommendations, with actual negotiations and policy decisions led by the Executive Yuan's Office of Trade Negotiations. Li Qinghua stated that the Ministry of Finance will continue to cooperate with the competent authorities for careful evaluation and emphasized that there are currently no plans to increase alcohol or commodity taxes.
Regarding the automobile commodity tax, the Ministry of Finance also pointed out that although domestic and foreign vehicles are taxed equally, whether to adjust the tax rate in negotiations with the U.S. will depend on the overall progress of negotiations and industry policy to avoid losing leverage in the negotiations.
