Taipei: Taiwan's phalaenopsis orchid, plastics, and machine tool exports are set to encounter intensified competition as the United States starts implementing a 20 percent temporary tariff on Taiwanese imports, according to Taiwan's Executive Yuan. Industry experts anticipate a "limited" impact from the tariff.

According to Focus Taiwan, Executive Yuan Secretary-General Kung Ming-hsin mentioned on Wednesday that although the 20 percent rate is a reduction from an initially proposed 32 percent, the impact on individual industries will vary significantly. Kung highlighted phalaenopsis orchids, noting Taiwan's substantial 46 percent market share in the U.S., as a key concern. In contrast, the Netherlands, Taiwan's primary competitor in this sector, faces a lower 15 percent tariff.

Kung also pointed out that Taiwanese companies have been grappling with a 10 percent tariff since April, and the increase to 20 percent will introduce additional challenges. To mitigate these effects, the Executive Yuan intends to draft a resilience special budget, which will require time for review, while offering immediate short-term assistance.

Deputy Trade Representative Yen Huai-shing from the Executive Yuan's Office of Trade Negotiations stated that Taiwan's 20 percent rate is the second-largest tariff reduction among countries with a trade deficit with the U.S. Yen clarified that the 20 percent tariff is "a temporary tariff" and emphasized that "August 7 is not the deadline for talks." Taipei remains "in negotiations" with Washington, following a notice received by Taiwan's negotiating team before July 31 that the "Taiwan-U.S. concluding meeting had not been completed."

In response, Formosa Plastics Group announced that the new U.S. tariff would have a limited direct impact, as the company's export volume to the U.S. is relatively low. However, they cautioned that indirect effects could be significant, potentially driving inflation and weakening U.S. consumer spending. Formosa Chemicals and Fibre Corporation Chairman Hong Fu-yuan highlighted that the company exported NT$5.1 billion worth of goods to the U.S. in 2024, representing about 2 percent of its total annual revenue. He noted that over half of these exports could be managed to avoid tariffs, while the remainder would be withdrawn from the American market.

Former chairman of Taiwanese machine tool company Fair Friend Group (FFG), Yang Te-hua, stated that the company had already increased low-cost inventory levels at its U.S. warehouses to mitigate short-term impacts. He added that only 10 percent of FFG's exports are directed to the United States, suggesting a limited overall effect on the group.