In recent years, Taiwan has steadily climbed up the ladder of major trading partners of the United States. Between 2018 and 2021, the value of two-way trade in goods rose by 50% from US$76 billion to US$114 billion, according to U.S. government data. That growth enabled Taiwan to move up one notch each year in the ranking of America’s leading trade partners – from 11th place in 2018 to 10th in 2019, 9th in 2020, and 8th in 2021 – in the process passing more populous countries such as France, India, Italy, and Vietnam. In 2021, Taiwan accounted for 2.5% of all U.S. trade, up from 1.8% in 2018.
Last year the leading U.S. trade partners were neighbors Canada and Mexico, followed by China, Japan, Germany, Korea, and the UK.
The balance of trade has remained consistently in Taiwan’s favor, with the size of the Taiwan surplus rising from US$15.6 billion in 2018 to over US$40 billion last year.
Besides normal organic growth, changes in global economic conditions played a part in the rise in Taiwan’s importance as a U.S. trading partner. One factor was the Trump administration’s imposition of heavy tariffs on many goods made in China in retaliation for intellectual property theft and other unfair Chinese trade practices. As a result, many Taiwanese-owned companies in China opted to move some manufacturing operations to other locations. The Taiwan government provided incentives to encourage “reshoring” to Taiwan. When companies that returned to Taiwan then exported to the U.S., the value of the trade shifted from the U.S.-China trade ledger to U.S.-Taiwan’s.
The COVID-19 scourge has also had its impact. With so many people spending more time at home – whether because of work-from-home policies, quarantines, and lockdowns, or a desire for more self-protection – demand surged for home office and home entertainment equipment. Taiwan was a leading supplier of both finished consumer-electronics products and the semiconductor chips and other components needed for their production.
So far in 2022, bilateral trade has continued to grow at a healthy pace, with two-way trade between Taiwan and the U.S. amounting to US$65 billion for the first half of the year. But as Vietnam and India regained positions slightly ahead of Taiwan’s, it is unclear whether the end of the year will again see Taiwan ranking in eighth place.