In a significant move to bolster economic ties with the United States, Taiwan’s President Lai Ching-te announced on Sunday a proposal to initiate negotiations for a zero-tariff trade agreement, drawing inspiration from the U.S.-Canada-Mexico agreement. This initiative comes in response to the recent imposition of broad U.S. import tariffs by President Donald Trump, including a 32% duty on Taiwanese products, excluding semiconductors.
President Lai emphasized that Taiwan would not engage in reciprocal tariff measures. Instead, the island nation aims to strengthen economic relations by increasing investments in the U.S. and removing existing trade barriers. Highlighting this commitment, Taiwan Semiconductor Manufacturing Company (TSMC) has unveiled a $100 billion expansion plan in the U.S. Lai projected further investments from various sectors, including electronics and energy. Additionally, Taiwan is considering substantial purchases of U.S. goods and defense weapons to balance trade relations.
The announcement follows a tumultuous period for Taiwan’s economy. On April 7, 2025, the Taiwanese stock market experienced its worst-ever single-day drop, plunging nearly 10% in the wake of the new U.S. tariffs. Major electronics and semiconductor companies, such as TSMC and Foxconn, saw their shares drop around 10%, triggering market circuit breakers. In response, Taiwan’s government introduced an NT$88 billion ($2.65 billion) support package and imposed a temporary ban on short-selling to mitigate market volatility.
President Lai reiterated Taiwan’s resilience in overcoming global challenges and its commitment to evolving into a stronger, crisis-resistant economy. This proactive approach aims to not only address the immediate economic challenges but also to lay the groundwork for a more robust and mutually beneficial trade relationship with the United States.
