Taipei [Taiwan], April 27 : Facing mounting pressure from new US tariffs, more than a quarter of Taiwanese businesses operating in China are considering closing their operations there, while half are preparing to shift investments to supply chains outside China, Straits Exchange Foundation (SEF) Secretary-General Luo Wen-jia said on Friday as per reports by Taipei Times.
Luo explained that the uncertainty began after US President Donald Trump, on April 2, imposed a 32 per cent tariff on imports from Taiwan. Although the implementation of the 32 per cent tariff was paused for 90 days a week later, a separate, universal 10 per cent tariff was immediately applied to most imports globally.
Further adjustments came on April 12, when the Trump administration announced that computers, smartphones, and semiconductors would be exempted from the new tariffs.
Companies operating in China that primarily export to the US and rely on low gross profit margins are among the most severely affected by the tariff changes, Luo said. Taiwanese businesses catering directly to China's domestic market are also facing increased challenges, reported Taipei Times.
As tariffs have restricted the flow of imported materials and components for Chinese domestic industries, excess stored products have been redirected into the local market, driving up competition and tightening margins, Luo added.
While the impact on sectors such as electronics, information technology (IT), and semiconductors remains relatively limited for now, the Mainland Affairs Council has urged business owners to remain cautious and monitor the Chinese market's reactions closely, Luo said. In the face of short-term uncertainties stemming from the new US trade policies, Taiwanese businesses largely agree on the need to diversify.
"The consensus among Taiwanese businesses is to increase investment in non-Chinese supply chains and bolster the resilience of regional supply chains to weather the effects of changes in the international economic order and geopolitical shifts," Luo said.
In addition to economic concerns, the SEF also issued a warning to Taiwanese travellers planning to visit China during the upcoming summer break. Luo cautioned that so-called "youth start-up assistance groups" and "youth culture interaction groups" could be used as covers for scam operations.
He cited an incident involving the Chinese Youth Entrepreneurs Association, which allegedly used identification documents from Taiwanese tour group members to apply for loans in Sichuan's youth start-up zones without their knowledge, Taipei Times reported.
Cultural exchange groups, Luo said, could similarly mask activities focused on cheap tours or political propaganda tied to "united front" efforts. While the number of people reported missing due to such schemes remains unclear, even isolated incidents highlight the serious risks of "disappearing" while traveling to China, he warned.
The SEF plans to publicise these cases anonymously to raise awareness about the potential dangers.
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