Experts Argue Against US Tariff Policies Linked to Trade Deficits; Long-term Solutions Needed for Genuine Improvement
4 April 2025 · Uncategorized ·
President Trump announced the imposition of 32% tariffs on imports from Taiwan. Experts today pointed out that the method used by the Trump administration to calculate tariff rates is entirely based on trade deficits and "is quite unfair." Equal tariffs are mainly aimed at fulfilling campaign promises, serving more as policy declarations than economic measures; they may be implemented for about half a year until their costs reflect in the US economy.
Trump announced yesterday levying 32% equal tariffs against Taiwan. He said that other countries would face approximately half of what those nations impose on American goods and services but this calculation method has drawn significant attention and criticism from experts. The Trump administration's approach involves dividing a country’s trade deficit with the U.S. by its exports to America before halving it.
Riley Walters, an international economics expert at Hudson Institute in Washington D.C., told CNA that such calculations are based on "bad math." He does not believe Taiwan has such high tariffs against American goods and services; large volumes of Taiwanese products exported to the U.S. stem mainly from demand for routers, servers, and other ICT equipment.
Walters argues that while the White House often cites trade barriers as examples, their calculation method solely relies on trade deficits treating them directly as results from tariffs or non-tariff measures which "is not entirely accurate" and “quite unfair.” This is especially true since every country will be taxed regardless of whether they have a surplus with America.
George Washington University economics lecturer Chieh-Chi Kuo also criticized this approach for being completely unreasonable. According to White House data, Trump plans to impose 10% tariffs on all countries starting from midnight May 5th and higher rates against other major trade deficit nations effective at the same time nine days later.
Kuo believes that after announcing equal tariffs there will be about a week before they are officially implemented during which administration might negotiate with trading partners. Trump aims to enhance his negotiating leverage but may reduce these taxes once he achieves his goals.
In Kuo's view, this is likely short-term policy aimed at fulfilling campaign promises such as bringing manufacturing back to America; it has more of a symbolic than economic impact. However, tariffs could increase prices and harm the economy in the long run if an economic downturn occurs leading to adjustments then.
Walters believes that other countries hope for negotiations during this period but does not expect any significant changes within one week. He thinks there might be opportunities after six months or a year when these tariff costs start affecting America's real economy rather than just stock market volatility.
Regarding the impact of equal tariffs on Taiwanese enterprises, Kuo noted they aim to increase import prices and encourage American consumers to buy domestically produced goods instead. According to surveys Taiwan’s major exports to U.S. in 2024 include large machinery equipment and electronics products metal products chemicals plastics rubber products machine tools petrochemicals clothing consumer electronic products; these industries will likely be significantly affected.
Walters pointed out that equal tariffs may increase costs for Taiwanese companies investing in the US, including TSMC's recent expansion plans. The administration’s stance is that foreign enterprises should invest within America to avoid paying taxes but this isn't entirely true as American ICT industry still needs key minerals and materials imported from abroad.
Although White House stated yesterday exemptions on steel drugs semiconductors etc., Trump today said he would soon impose tariffs on these imports too. Walters observed the temporary exemption of semiconductor products is due to plans for separate handling akin to previous steel aluminum auto tariff measures; a national security investigation might lead to 25% tariffs.
Kuo suggested Taiwanese enterprises directly invest in setting up factories within America and move part manufacturing there while negotiating favorable tax rates with state governments. He also urged improving the reliability of Made-in-Taiwan products' brand image expanding sales markets outside the US diluting future policy uncertainties from Washington regarding specific goods.
If equal tariffs are implemented as scheduled on May 9th Kuo believes it will usher in a new era of trade protectionism globally; this is not beneficial for export-dependent economies like Taiwan.
Trump announced yesterday levying 32% equal tariffs against Taiwan. He said that other countries would face approximately half of what those nations impose on American goods and services but this calculation method has drawn significant attention and criticism from experts. The Trump administration's approach involves dividing a country’s trade deficit with the U.S. by its exports to America before halving it.
Riley Walters, an international economics expert at Hudson Institute in Washington D.C., told CNA that such calculations are based on "bad math." He does not believe Taiwan has such high tariffs against American goods and services; large volumes of Taiwanese products exported to the U.S. stem mainly from demand for routers, servers, and other ICT equipment.
Walters argues that while the White House often cites trade barriers as examples, their calculation method solely relies on trade deficits treating them directly as results from tariffs or non-tariff measures which "is not entirely accurate" and “quite unfair.” This is especially true since every country will be taxed regardless of whether they have a surplus with America.
George Washington University economics lecturer Chieh-Chi Kuo also criticized this approach for being completely unreasonable. According to White House data, Trump plans to impose 10% tariffs on all countries starting from midnight May 5th and higher rates against other major trade deficit nations effective at the same time nine days later.
Kuo believes that after announcing equal tariffs there will be about a week before they are officially implemented during which administration might negotiate with trading partners. Trump aims to enhance his negotiating leverage but may reduce these taxes once he achieves his goals.
In Kuo's view, this is likely short-term policy aimed at fulfilling campaign promises such as bringing manufacturing back to America; it has more of a symbolic than economic impact. However, tariffs could increase prices and harm the economy in the long run if an economic downturn occurs leading to adjustments then.
Walters believes that other countries hope for negotiations during this period but does not expect any significant changes within one week. He thinks there might be opportunities after six months or a year when these tariff costs start affecting America's real economy rather than just stock market volatility.
Regarding the impact of equal tariffs on Taiwanese enterprises, Kuo noted they aim to increase import prices and encourage American consumers to buy domestically produced goods instead. According to surveys Taiwan’s major exports to U.S. in 2024 include large machinery equipment and electronics products metal products chemicals plastics rubber products machine tools petrochemicals clothing consumer electronic products; these industries will likely be significantly affected.
Walters pointed out that equal tariffs may increase costs for Taiwanese companies investing in the US, including TSMC's recent expansion plans. The administration’s stance is that foreign enterprises should invest within America to avoid paying taxes but this isn't entirely true as American ICT industry still needs key minerals and materials imported from abroad.
Although White House stated yesterday exemptions on steel drugs semiconductors etc., Trump today said he would soon impose tariffs on these imports too. Walters observed the temporary exemption of semiconductor products is due to plans for separate handling akin to previous steel aluminum auto tariff measures; a national security investigation might lead to 25% tariffs.
Kuo suggested Taiwanese enterprises directly invest in setting up factories within America and move part manufacturing there while negotiating favorable tax rates with state governments. He also urged improving the reliability of Made-in-Taiwan products' brand image expanding sales markets outside the US diluting future policy uncertainties from Washington regarding specific goods.
If equal tariffs are implemented as scheduled on May 9th Kuo believes it will usher in a new era of trade protectionism globally; this is not beneficial for export-dependent economies like Taiwan.