Taiwan’s largest companies have spent the past two decades building factories ever deeper into China, particularly in the Yangtze River and Pearl River deltas. Besides having a major impact on global supply chains, this push has left the economy of Taiwan deeply entwined with that of its large neighbor — and, increasingly, antagonist — across the strait.
There are growing signs that many of Taiwan’s companies may soon begin to unwind that 20-year process by withdrawing from China, due in no small part to the U.S.-China trade dispute.
Perhaps more than any other economy, Taiwan has found itself trapped in the middle of the trade war between the world’s two superpowers. China and the U.S. are Taiwan’s top two individual trading partners, and the Taiwanese economy is heavily reliant on global trade.
Products that are made by Taiwanese companies at plants in the mainland are effectively considered to be “Made in China” — putting them in the crosshairs for U.S. tariffs that could rise to 25% early next year. Already, there are widespread concerns in Taiwan that the trade war is hurting Chinese demand for its exports.
The likelihood of China giving the U.S. what it wants — which includes removing trade barriers and reaching an agreement on ending cyberespionage and intellectual property theft — within the 90-day window appears low at the moment.