Taiwan is expected to emerge largely unscathed from a potential U.S.-China trade war, but the government is keeping a close eye on developments and stands ready to act, according to the Central Bank July 5.
The U.S. is implementing tariffs in response to China’s unfair business practices related to the forced transfer of American technology and intellectual property, the Central Bank said, adding that this action has devalued major Asian currencies, heightened market volatility and could drag other economies into a broader trade dispute.
Last month the Office of the U.S. Trade Representative announced an additional 25 percent duty set to be imposed in two stages on 1,102 items representing US$50 billion in Chinese imports. The first took effect July 6 covering 808 items—mostly information and communication technology products and machinery equipment—worth US$34 billion.
In response, China immediately slapped an identical tariff on U.S. imports of the same value, with aquaculture products, automobiles and soybeans the hardest hit.
According to the Central Bank, although Chinese items subject to the additional duty include those sourced from Taiwan, this is not a cause for concern as they are mainly for domestic consumption and account for 0.21 percent of Taiwan’s gross domestic product based on 2017 trade statistics. Affected U.S. products also have no significant connection with Taiwan.
Since talk of U.S. tariffs started, the New Taiwan dollar fell 1.9 percent, the Central Bank said, adding that robust fundamentals like abundant foreign reserves, healthy balance of payments and nearly zero foreign debt put the country in good stead to weather fluctuations in related international capital flows.
All necessary steps are being taken to stabilize the forex market and enhance liquidity if irregularities or seasonal factors trigger disorder and threaten to hamstring economic development, the Central Bank said. (SFC-E)
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