The Upside of Trump for Taiwan

 

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While Donald Trump seems to have a fixation on the trade deficit the consensus among economists is that the trade deficit does not really matter. However, the upshot of all of this has been a massive redirection in trade flows around Asia, to and from the US.

 

What has been some of the effects of Trump's trade war with China on Taiwan and Taiwanese companies? When the tariffs were first announced we had several clients that were scrambling to find out how it will affect them. They have factories in China so there were fears that their production lines could be badly affected. Luckily this didn't end up happening.

 

Another concern for our semiconductor clients was/is the escalating feud between the West and Huawei, ZTE, and other Chinese tech companies. Taiwan is right smack dab in the middle of the semiconductor supply chain and this is a sensitive topic. Again our clients have mostly been lucky that the actual implementation of the rules have been pragmatic and they're coping pretty well.

 

On the other hand I've seen several upsides for Taiwan, its businesses, and our clients. For one there has been a 're-shoring' of companies that are bringing production back to Taiwan. We have a semiconductor wafer manufacturer that announced a new FAB in Taiwan whereas in the past it was planned for China. There are numerous other companies that are doing the same.

 

Another positive is that Taiwanese companies are picking up orders that otherwise went to China. According to the U.S. Census Bureau, Chinese goods exports to the U.S. fell 12.3% year-over-year from January through May while Taiwan had a 22.5% year-over-year increase for the same five months. This is more than three times the increase from 2017-2018. Vietnam and South Korea have also benefited from this.

 

 

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So I would argue that while the fear of a trade war has had negative effects in things such as business investment, if you get past the rhetoric and focus on the actual deeds, things have worked out quite well for Taiwan. Let's hope it’s a trend that can continue!