Taiwanese companies not sure what to make of Trump’s tariff plan

Taipei, Taiwanese companies, many of which make or process their products in China, are busy assessing the impact of U.S. President Donald Trump's plan to impose tariffs on up to US$60 billion in imports from China, with some foreseeing only a limited effect on their companies.

A number of Taiwanese makers of power, optical and connector components said Friday that the tariff plan will probably not have a direct impact on them, but noted that the actual effect cannot be accurately assessed until details of the plan are released.

Delta Electronics Inc., one of Taiwan's leading power management system suppliers, said it remains to be seen whether the plan targets actual manufacturers or the brands that sell products.

That matters because of the technology sector's global supply chains. Taiwanese tech companies manufacture a lot in China but their biggest customers are Western brands, so how the tariffs are actually targeted will determine their impact, Delta said.

Huang Chien-chung (???), secretary-general of the Taiwan Machine Tool and Accessory Builders' Association, believed the Trump administration's tariff plan could affect some Taiwanese machine tool makers in the first two to three months after it is put into place.

But he said the tariffs were unlikely to have a long-term effect on members of his association because many of them are upgrading their systems and speeding up investment in smart manufacturing to become more globally competitive.

Taiwanese machinery companies with factories in China also sell most of their products to the Chinese domestic market, instead of exporting them to other countries, so the tariff plan should not have a major effect on them, said Ko Pa-hsi (???), head of the Taiwan Association of Machinery Industry.

Some experts predicted, however, that the U.S. tariff plan could affect laptop computer and mobile phone companies with high market shares in the United States.

Andrew Lu (???), a former Asia-Pacific semiconductor analyst at Barclays, said mobile phones are the products that could take the biggest hit, while semiconductors are less likely to be hurt.

Less than 10 percent of the world's semiconductor packaging is done in China, with the majority done in Taiwan, so if the U.S.'s "Section 301" investigation does not target Taiwan, it will not affect Taiwanese semiconductor companies, Lu argued.

Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, said Friday that its operations will not be affected because its production is based in Taiwan.

TSMC's smaller competitor United Microelectronics Corp., said the tariff plan could have a negative impact on the global economy, but it was too early to predict how much of a difference it will make.

Taiwanese PC brands Asustek Computer Inc. and Acer Inc. both said they are closely watching and evaluating the situation and will respond with caution.

Meanwhile, Taiwanese contract makers of electronics and information and communication technology products, including Quanta Computer Inc., Compal Electronics Inc., Wistron Corp., Pegatron Corp. and Inventec Corp., said they are trying to clarify the details of Trump's plan, and will discuss how to respond with their customers.

Brokerages and asset managers had varied opinions on how to respond to the tariff plan.

Li Fang-kuo (???), chairman of Uni-President's investment management division, said the plan will shatter the traditional view of "China as the factory, and the United States as the market."

Taiwanese companies that want to do business in the U.S. may have to move their production there, he said.

Hua Nan Securities Investment Management Chairman David Chu (???) believed, however, that there is not much Taiwanese companies can do.

"When two elephants are fighting each other, what can we do?" he said, arguing that it was "impossible" for Taiwan to reduce its ties with China because Taiwan is merely a small link in the global supply chain.

Joen-Ray Chen (???), chairman of Ray Wing Research and Investment Corp., agreed, saying there was little Taiwan could do and that it was impossible for it to cut ties with China economically.

Chen did advise Taiwanese companies, however, to reduce their dependence on a single country and expand their global reach.

Most companies and analysts had a hard time seriously assessing the Trump plan because it was short on details.

Trump signed a presidential memorandum targeting up to US$60 billion in Chinese goods with tariffs for the alleged misappropriation of U.S. intellectual property by China.

But the White House said a list of proposed tariffs was not immediately available and would be issued within 15 days.

After the list is published, there will be a 30-day consultation period during which businesses can weigh in.

Source: Focus Taiwan News Channel