Risks of Taiwan's Exports to the U.S. Surpassing Those to China

The Storm Media Editorial, June 17, 2025

Last month, Taiwan’s exports to the United States surpassed those to mainland China. This number—and the event itself—is worth discussing. Although the figures appear significant, they are primarily influenced by short-term factors. Even if the United States were to replace the mainland as Taiwan’s top export destination, it’s still too early to say whether this is a cause for celebration or concern.

According to data released by the Ministry of Finance last week, Taiwan exported $15.5 billion to the United States in May, setting a new monthly record. U.S. exports accounted for 30 percent of Taiwan’s total exports, compared to 27.2 percent to mainland China (including Hong Kong), making the United States Taiwan’s largest export market for that month.

For those who have long been concerned about Taiwan’s overreliance on mainland China for exports, this might seem like a reason to celebrate. But before celebrating the supposed reduction of economic dependence on the mainland, we should take a closer look at how real and sustainable these numbers are.

Taiwan’s dependence on mainland China for exports increased significantly during the administration of former President Chen Shui-bian, rising from 24 percent to 41 percent. Over the past two decades, this percentage has fluctuated, but it has mostly hovered around 40 percent. Despite policy efforts to diversify export markets, such efforts have largely been ineffective. Thus, the recent shift toward the United States may seem promising—but is it real?

This apparent shift is significantly influenced by short-term distortions, particularly those resulting from the trade war initiated by President Donald Trump of the United States.

Taiwan’s exports in May grew 38.6 percent year-on-year—a remarkable surge. However, exports to the United States skyrocketed by 87.4 percent, driven by the artificial intelligence (AI) boom, which increased demand for Taiwan’s information and communication technology (ICT) products. Another key factor was the temporary suspension of the 32 percent retaliatory tariff on Taiwanese goods, which reduced the rate to 10 percent. This created strong incentives for importers and exporters to front-load shipments before higher tariffs resumed.

Looking back at February this year, U.S. exports already slightly exceeded those to mainland China, with a 28.5 percent share compared to the mainland’s 28.4 percent. Again, this was influenced by the trade war. But from January to May, the United States accounted for 26.8 percent of Taiwan’s exports—still slightly behind the mainland’s 28.1 percent. Although the full-year outcome remains uncertain, the gap has narrowed to just 1.3 percentage points—the closest in over two decades.

In theory, reducing dependence on mainland China should be beneficial for Taiwan, as it would help lower geopolitical and economic risks. However, what makes this moment frustrating—even saddening—for many in Taiwan is that relying more on an ally hasn’t led to a better outcome. In some ways, it’s been worse.

During 2021 and 2022, mainland China still accounted for roughly 40 percent of Taiwan’s exports, while the United States held a 15 percent share. Over the past two years, this trend has shifted significantly: the mainland’s share has fallen from 35 percent to 31 percent, while that of the United States has risen from 17 percent to 23 percent. Factors such as the mainland’s economic slowdown, the U.S.-China tech war, and the AI boom all contributed to the situation.

Yet Taiwan, despite being an American ally, became a target under Trump’s trade policies. As exports to the United States surged, so did the trade surplus, triggering a 32 percent tariff on Taiwan goods. Taiwan was also pressured to “invest” in the United States—for example, in Alaska’s natural gas pipelines. Even Taiwan’s crown jewel, the semiconductor industry, is being aggressively pursued by the United States. Meanwhile, the shadow of the “Mar-a-Lago Agreement” looms, raising concerns that Taiwan may be forced into long-term, unfavorable economic commitments.

Compared to past years when dependence on mainland China was high, growing reliance on the United States has led to even harsher treatment from Washington. American tactics and attitude are arguably no better than Beijing’s—perhaps worse. It brings to mind Henry Kissinger’s famous quote: “To be America’s enemy is dangerous, but to be its friend is fatal.”

Whether the United States can firmly replace mainland China as Taiwan’s top export market depends on many external variables.

From: https://www.storm.mg/article/11045695
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