Trade war: Taiwanese firms to flee mainland China over Donald Trump’s tariffs, claims Taipei

Self-ruled island’s government offering ‘the most effective’ help for companies to move operations to Taiwan, ministers say

PUBLISHED : Tuesday, 18 September, 2018, 9:47pm
UPDATED : Wednesday, 19 September, 2018, 3:36am

Taiwanese businesses based in mainland China are being persuaded to move home by the escalating US-China trade war, according to the island’s government, which is promising “the most effective” aid to help them do so.

At least 20 Taiwanese enterprises were likely to relocate from the mainland to Taiwan, wary of the imminent impact of fresh US tariffs on imports from mainland China, Taiwan’s Minister of Economic Affairs Shen Jong-chin said on Tuesday.

The stand-off between the world’s two biggest economies has expanded dramatically this week, with US President Donald Trump announcing on Monday that he will impose 10 per cent tariffs from next week – climbing to 25 per cent on January 1 – on US$200 billion of Chinese goods.

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Trump threatened to place tariffs on another US$267 billion of imports if China took retaliatory action – which Beijing did, saying it will put tariffs on US$60 billion of US goods – in a further worry for Taiwanese firms with mainland production bases.

The United States does not apply its tariffs to Taiwan, which is self-ruled but regarded as a renegade province by Beijing.

“Some 20 Taiwanese businesses have already expressed their desire to relocate here,” Shen said.

Those wanting to move their production bases to the island included internet, communications, electronic components and bicycle manufacturing companies, ministry officials said.

There are close to 100,000 Taiwanese firms on the mainland, including small companies, according to government statistics released by Taipei and Beijing.

Former economics minister Deng Chen-chung, now a minister without portfolio, said on Tuesday the Taiwan government would provide all necessary help for Taiwanese enterprises, as the trade war offered the island a golden chance to persuade businesses to move their operations home.

US-China trade war threats prompt Taiwan firms to consider moving away from mainland

“We welcome mainland-based Taiwanese businesses to move their bases back,” he said. “The government has already installed various mechanisms to assist the relocated businesses and will provide them with the most effective aid during their relocation.”

Deng argued that the 10 per cent tariffs “will not have a strong direct impact on Taiwan”, but Liang Kuo-yuan, president of Taipei-based think tank Yuanta-Polaris Research Institute, said the US-China trade war could eventually hurt Taiwan, especially in the electronic components and machine tools sectors.

“Being a small and open economy, Taiwan is unlikely to escape unscathed from the trade war,” Liang said. “After all, the US and China are two of Taiwan’s major export markets.”