New U.S. tariffs big threat to Taiwan businesses in China: experts

Shoppers sit on a bench with a decorated with U.S. flag browsing their smartphones outside a fashion boutique selling U.S. brand clothing at the capital city's popular shopping mall in Beijing, Monday, Sept. 24, 2018. China raised tariffs Monday on thousands of U.S. goods in an escalation of its fight with President Donald Trump over technology policy and accused Washington of bullying Beijing and damaging the global economy. (AP Photo/Andy Wong)

Taipei, Sept. 24 (CNA)-Taiwanese businesses operating in China will be badly hurt by the trade skirmish between the United States and China next year when their orders are likely to gradually shift to other countries, experts said.

The U.S. government recently imposed a new 10 percent tariff on US$200 billion worth of Chinese imports, spanning thousands of products that include food seasonings, baseball gloves, network routers and industrial machinery parts.

The 10 percent tariff on those goods will be increased to 25 percent effective Jan. 1, 2019. Chen Tain-jy (陳添枝), an economics professor at National Taiwan University, said the decision for a two-phase increase was made to reduce the toll of higher tariffs on holiday shoppers buying Chinese imports in the coming months.

China-based Taiwan manufacturers will begin to feel the pinch beginning next year, because American importers will be looking elsewhere for their products to avoid the added costs, Chen told CNA.

He suggested Taiwanese firms based in China whose main export market is the U.S. start thinking about relocating back to Taiwan or setting up factories in other countries to avoid the increased operating costs brought by the tariffs.

Liu Meng-chun (劉孟俊), head of the First Research Division at the Taipei-based Chung-Hua Institution for Economic Research (CIEA), said Taiwanese companies whose main customer base is in China will also be hit by the new tariff measure.

The Chinese government has already devalued its currency by nearly 10 percent to support its exporters amid trade tensions with the U.S., but it isn’t likely to let the yuan weaken much further due to the risk of inflation, Liu said.

He said Taiwan will not escape unscathed from the trade skirmish because of its close trade relations with China.