Taipei, April 10 (CNA) The only way to deal with tariffs imposed by the “unpredictable” U.S. President Donald Trump is to talk reasonably with him, the governor of Taiwan’s central bank said Thursday.
Hours after the so-called “reciprocal” tariffs went into effect Wednesday, Trump said he was authorizing a 90-day pause but would maintain a baseline universal tariff of 10 percent for most countries, with immediate effect. The exception was China, he said, announcing an increased tariff of 125 percent on that country.
On Thursday, Governor Yang Chin-long (楊金龍) told a legislative committee meeting on the economic impact of Trump’s tariffs and Taiwan’s response measures that Trump’s policy U-turn may have been prompted by U.S. stocks plummeting shortly after the tariffs took effect.
Trump’s announcement of a temporary pause sent U.S. markets soaring overnight, with Taiwan shares also surging more than 1,600 points Thursday.
During the legislative session, Kuomintang Legislator Lin Te-fu (林德福) said that even though Taiwan is among the countries listed by Trump for the 90-day pause of his “reciprocal” tariffs, he had announced a 32 percent tariff on imports from Taiwan.
Lin asked whether this meant that “the U.S. is taking advantage of Taiwan.”
In response, Yang explained that the formula used by the U.S. to calculate reciprocal tariffs is unreasonable and too rough, but it is aimed at the whole world and applies to all countries, not just Taiwan.
Asked about how Taiwan would respond to the “reciprocal” tariffs, Yang said that Trump did not take into account the fact that Taiwan’s trade surplus with the U.S. was because of his country’s need for Taiwan’s products.
Taiwan has contributed to the U.S.’ productivity and economy, Yang added.
On the issue of reciprocal tariffs, Yang said that if all countries start talking about it with the U.S., it should be more effective to achieve “reciprocity.”
However, Yang said that given that the uncertainty caused by Trump on Taiwan’s financial markets is too high, “the only way is to have a reasonable talk with him (Trump).”
If uncertain factors can be eliminated, a stable return in Taiwan’s equity market can be expected, he said.
Yang said a suggestion from legislators that Taiwan’s central bank use its holdings of U.S. Treasury securities as a bargaining chip was a “good idea.”
If Taiwan embarks on such negotiations with the U.S., it should tell the other party that while the U.S. has to issue government bonds to finance its deficits, Taiwan’s long-term holding of U.S. Treasuries will help lower its financial costs, Yang added.
Asked whether Taiwan’s benchmark Taiex index will enter a bear market due to Trump’s tariffs policy, Yang admitted that at present, the uncertainty in the stock market is quite high.
However, Financial Supervisory Commission (FSC) Chairman Peng Jin-lung (彭金隆) said that it certainly has not entered a bear market and there is no systemic risk in the market.
Meanwhile, Finance Minister Chuang Tsui-yun (莊翠雲) said during the legislative session that the ministry has assessed whether to increase the authorized amount of NT$500 billion (US$15.16 billion) in the National Financial Stabilization Fund for an intervention in the stock market to ease volatility.
At another legislative committee meeting, Economics Minister Kuo Jyh-huei (郭智輝) said that the government is set to make an announcement on April 14 on bailouts for businesses to counter new U.S. tariffs.
