Taiwan Central Bank Governor on U.S.-Taiwan Relations

TAIPEI (Reuters) – The head of Taiwan's central bank expressed doubt on Thursday regarding U.S. President-elect Donald Trump's administration imposing penalties on Taiwan, particularly due to the island's pivotal role in the semiconductor industry.

During the campaign, Trump raised concerns about Taiwan allegedly stealing American chip business and suggested a 10% tariff on all U.S. imports along with a 60% levy on Chinese-made products.

Responding to lawmakers’ questions, Taiwan central bank governor Yang Chin-long emphasized that semiconductors and other tech products produced in Taiwan are of strategic importance, indicating that their supply chain must remain uninterrupted. "Chips and information and telecommunications products are what the U.S. needs most," Yang stated, affirming, "I don't think the United States would penalize Taiwan."

He noted that Taiwan-U.S. cooperation in the semiconductor sector benefits both parties, highlighting the symbiotic relationship: "They design them and we make them."

In Trump's first term, tariffs were imposed on China, but Taiwan was exempt. With major tech companies like TSMC based in Taiwan, the island serves as a key supplier for global leaders such as Apple and Nvidia, reflecting the demand in global technology markets.

Nonetheless, Yang acknowledged that if Trump's proposed new tariffs were enacted, Taiwan's export-dependent economy could be adversely affected, a concern previously noted in a report to parliament.

Taiwan maintains a significant trade surplus with the U.S., projected to reach $50 billion this year. Yang suggested that increasing imports from the U.S. and TSMC's investments in the U.S., including $65 billion on new factories in Arizona, could help mitigate the trade imbalance.

The United States is regarded as Taiwan's most critical international supporter and arms supplier, despite the lack of formal diplomatic relations.