With impending U.S. tariffs poised to affect Taiwan’s traditional industries, the Taiwan government in May launched a NT$93 billion support plan covering nine key areas, including the island’s industrial and agricultural sectors. Chen Min-teh, secretary general of the Taiwan Transport Vehicle Manufacturers Association (TTVMA), estimates that about NT$75 billion will go to industrial support, with the remainder directed to farmers and fishermen.

In 2023, the OECD ranked Taiwan as the world’s third largest source of metal fasteners. Most of these exports — including screws and bolts — go to the United States, making the 20% reciprocal tariff a significant pressure point. Last year, the United States imported US$2.2 billion worth of metal fasteners, according to a report from the Global Taiwan Institute, a U.S.-based think tank.

Chen notes that while the number of Taiwanese passenger cars imported by the United States is relatively small — not even placing among the top five suppliers in 2024 — the United States takes just over half of Taiwan’s export pie of car components, manufactured by around 1,700 Taiwanese companies. Japan and South Korea also export these components but face lower U.S. tariff rates, adding pressure on Taiwan’s cost-sensitive small and medium-sized manufacturers. Other industries likely to feel the impact include hand tools, plumbing hardware, and heavy electrical equipment, as well as niche segments like moth orchids and mahi-mahi fish. 

The relief measures in the NT$93 billion package include interest-free or low-interest loans and other financial assistance for affected companies to upgrade their technology capabilities and retrain workers. The measures are also aimed at companies expanding to new markets abroad, while forthcoming tax breaks are expected to support R&D and equipment expenditures on items such as energy savings and carbon reductions, though official eligibility criteria have not yet been released. 

Liu Meng-chun, a research fellow at the Chung-Hua Institution for Economic Research, notes that the increased government focus has already begun supporting small and medium-sized enterprises to adopt AI in the workplace. In his National Day address in October, President Lai Ching-te said the government would invest tens of billions more each year to help companies advance toward net-zero emissions and accelerate digital upgrading.

The relief plan is framed as a chance for Taiwan’s traditional industries to strengthen their global competitiveness. Liu says certain sectors still require “significant upgrading.” 

Expanding on this point, he notes that exports of items like machine tools must include high-value services with both hardware and software in a total solution. As another example, Taiwan could offer a total home security solution that includes aftercare on top of security camera export and installation, he says. 

For his part, TTVMA’s Chen says that some Taiwanese car component makers are considering setting up production facilities in the United States to avoid the tariffs, while also looking to shift more sales away from the U.S. market to other overseas destinations. Taiwan’s earlier reliance on offshoring to lower-cost manufacturing hubs is bringing less relief, he adds, as many of those countries now face their own U.S. tariffs — Vietnam’s 20% rate among them.

With government support, the transportation industry is moving toward producing advanced electric-powered vehicles and leveraging Taiwan’s semiconductor expertise to remain globally competitive, Chen says. The industry is also looking at making batteries, rechargers, and advanced driver assistance systems to aid Taiwan in reaching its net-zero goals by 2050. He adds that he feels “very optimistic” about the future for Taiwan’s vehicle industries and that “we will somehow overcome the problem.”