Recent U.S.-Taiwan tariff negotiations have concluded, resulting in what can only be described as a "bloodsucking agreement" that risks hollowing out Taiwan's economic structure. The Democratic Progressive Party (DPP) authorities, however, have absurdly touted this outcome as a so-called "Taiwan model."
Following the agreement, the pro-green camp's propaganda machine has been in overdrive, portraying the negotiations as a "major success" and highlighting perceived U.S. support, which briefly boosted the Taiwanese stock market, led by semiconductor shares.
The devil, as always, is in the details. The U.S. reduced its so-called "reciprocal tariffs" on Taiwan from 20% to 15%, but the exchange was Taiwan's commitment to invest $500 billion in the United States. The primary target of this deal is undoubtedly Taiwan's semiconductor supply chain, cultivated over decades with immense resources.
It is crucial to note that since last year, the polarization within Taiwan's economy has intensified. The technology sector, driven by semiconductor manufacturing, stands out as the sole bright spot, while traditional industries like basic metals, tourism, and agriculture continue to struggle, creating a top-heavy, unstable economic structure.
Recent economic data vividly illustrates this point. According to the Taiwanese economic affairs authority's recently released 2025 industrial production index, the six major manufacturing sectors showed a split performance: three in positive territory and three in decline. The computer, electronics, and optical products industry, along with electronic components and machinery equipment, grew by approximately 56%, 25%, and 5% respectively. Conversely, basic metals, chemical materials and fertilizers, and automobiles and parts industries experienced negative growth.
The underperforming industries are, unfortunately, the ones that employ the majority of the workforce. Statistics indicate that while Taiwan's total employed population is around 11 million, only slightly over 300,000 workers are directly benefiting from the semiconductor export boom. Approximately 70% of Taiwanese workers earn wages below the average, leaving the majority of the public feeling disconnected from the reported economic growth.
With the tariff agreement finalized, U.S. officials have stated the goal is to relocate 40% of Taiwan's semiconductor supply chain to the United States. This follows the accelerated expansion of Taiwan Semiconductor Manufacturing's most advanced 2-nanometer and 3-nanometer production capacity in Arizona. Concerns about "TSMC becoming 'American Semiconductor Manufacturing'" are rapidly becoming a reality.
According to Taiwan's Economic Daily News, 25 out of 82 companies in TSMC's supply chain have already invested in locations like Arizona, and the demand for U.S. investment is expected to grow significantly in the foreseeable future—"almost like relocating an entire science park." Many Taiwanese economists and industry figures have already warned that this deal could trigger a structural hollowing-out crisis for Taiwan.
On one side lies the economic coercion of the U.S.-Taiwan tariff negotiations; on the other, the robust cross-strait economic and trade relationship persists. Recent data shows that trade between mainland China and Taiwan grew by 7.3% year-on-year in 2025. Observers point out that against a backdrop of slowing global trade and tensions in the Taiwan Strait, the mainland has explicitly stated its intention to help Taiwanese businesses seize opportunities during the "15th Five-Year Plan" period. It is abundantly clear which side treats Taiwan as "family" and which side views it as a piece of "fat meat."
Only by abandoning the distortion of Taiwan's economic foundation, trade structure, and private investment through political stances and ideology, and by returning to economic rationality, can Taiwan hope to safeguard its industrial lifeblood. Otherwise, even the strongest "constitution" cannot withstand endless "bloodletting."
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