Taiwan's 20% tariff > New Taiwan Dollar depreciates below 30, creating a two-month low, next week's semiconductor tariff is the real monster.

The United States has imposed a 20% tariff on Taiwan, leading to a weakening of the Taiwanese stock market and the New Taiwan Dollar. Meanwhile, the semiconductor Section 232 ruling, which may be announced next week, has become the focal point of attention, with the market concentrating on subsequent negotiations and policy adjustments. (Background: The US imposes a 20% tariff on Taiwan, higher than Japan and South Korea! Lai Ching-te emphasizes that it is temporary; the drop in the stock market and analysis of industry pressure and negotiation outlook.) (Background: Is it so easy for Trump to replace Powell? An article explains how stable the Fed chair position is.) Following the announcement by the US this morning (1) that the tariff rate on Taiwan is set at 20% (to take effect next week), the Taiwanese stock market and the New Taiwan Dollar both weakened. In the forex market, the New Taiwan Dollar depreciated against the US Dollar, falling below 30, marking the lowest point in over two months since the end of May. Forex experts point out that the uncertainty surrounding the tariff issue has led to a shift of funds towards the US Dollar for safety, combined with a strengthening US Dollar index, putting overall pressure on Asian currencies, which also affects the performance of the New Taiwan Dollar. The market expects that if the New Taiwan Dollar continues to depreciate, the exchange rate against the US Dollar might need to rise to 31 to 32 to offset some export losses; however, if foreign capital withdraws en masse due to significant exchange rate fluctuations, the Taiwanese stock market may come under further pressure. Semiconductor tariffs become the next key focus with an expanded scope for Section 232. On the other hand, the market is highly concerned about whether the semiconductor industry will also face tariff adjustments. According to reports from the United Daily News, Mega International Commercial Bank's chairman Lee Hsiu-li pointed out: "The Section 232 ruling for semiconductors will be announced within a week, which is actually more important." US Secretary of Commerce Howard Lutnick also revealed on July 27 that an announcement regarding semiconductor import tariffs would be made within two weeks, indicating that next week may be a critical moment for Taiwan. It is understood that the White House's announcement this morning is merely an update on reciprocal tariffs, and the 20% rate does not apply to the tariff exemption list (Annex II) and the presidential memorandum for new exemptions, which includes semiconductors, servers, pharmaceutical raw materials, key components, minerals, and chemical materials, among other major products exported from Taiwan to the US that are excluded from the new tariffs. According to data from the Ministry of Economic Affairs' International Trade Bureau, the US Department of Commerce will initiate a Section 232 national security investigation into semiconductors, semiconductor manufacturing equipment, and their derivations starting April 1, 2025. The scope of investigation includes semiconductor substrates and bare wafers, traditional chips, advanced chips, microelectronic devices, and parts of semiconductor manufacturing equipment, with derivative products including downstream products containing semiconductors, such as those in the electronic product supply chain. The tariff rate on Taiwan is higher than that of Japan and South Korea, impacting traditional industries. However, under the current 20% tariff, there may be severe impacts on Taiwan's traditional industries, such as textiles, furniture, and automotive parts, where profit margins are only about 10% to 20%. The tariffs will completely erode profit margins, causing a sudden drop in corporate profitability. This may force some companies to consider relocating to Southeast Asian countries like Vietnam and India to reduce production costs. The business association also estimates that tariffs combined with exchange rate factors may lead to a total cost increase of 25% to 40%, further intensifying the pressure for industry relocation. The government emphasizes that the temporary tariff allows for further negotiation adjustments. In response to external concerns, the Presidential Office stated that Taiwan's "temporary tariff" of 20% is primarily due to incomplete negotiation procedures, and the US and Taiwan have not yet held a concluding meeting; therefore, the US has first announced a temporary tax rate of 20% for Taiwan. The Presidential Office stressed that as long as both parties reach an agreement in subsequent negotiations, the tax rate is expected to be lowered again. In the future, Taiwan and the US will continue discussions on supply chain cooperation and Section 232-related issues. Whether Taiwan and the US can reach a consensus on the tax rate in the coming weeks will be a key variable affecting Taiwan's economy and financial markets. Related reports: Is the next Fed chair Trump's favored "Treasury Secretary Mnuchin"? The White House quickly clarifies, Powell will step down next May. Trump meets with Powell at the White House "demanding the Fed to cut interest rates," Powell reiterates: The Federal Reserve adheres to the principle of non-politicization. Trump writes a letter of resignation "overruling Fed's Powell," WSJ: The White House announces the new Fed chair six months in advance to bypass restrictions. This article titled "Taiwan's 20% Tariff: New Taiwan Dollar Falls Below 30, Creating a Two-Month Low; Next Week's Semiconductor Tariff is the Real Challenge" was first published in BlockTempo, the most influential blockchain news media.