Businesses require clear, open policy standards

In the face of potential US tariffs, the Taiwanese government is deliberating on various strategies to support local businesses. Minister of Economic Affairs J.W. Kuo has suggested that China Steel Corp could offer price concessions to auto parts suppliers to help offset costs.

However, progress has been slow due to government inertia. Options such as fully scrapping duties or implementing targeted tax cuts have not yet been explored extensively. The machinery, molding, and auto sectors are considered critical areas that need specific attention in these preparations.

Industry experts and economists have repeatedly advocated for reducing commodity taxes and car import duties as solutions to non-trade barriers. The Ministry of Finance is also considering these options.

Minister Kuo later clarified that he was proposing a 5 percent discount for small-scale screw and steel nut producers, structured similarly to existing price cuts for distributors. However, this proposal has raised concerns among some, including the Labor Union of China Steel Corp, who fear it could undermine corporate governance and further weaken the company.

China Steel Corp, which established Sing Da Marine Structure Corp in 2018 to support the government's offshore wind localization initiative, reported a net loss of NT$1.66 billion in the first half of 2023. This is a reversal from a profit of NT$1.96 billion during the same period in 2022.

The ministries have stated they would have to await the results of trade talks before disclosing any tactical steps, fueling doubts over coordination. This stance on awaiting trade talk results before disclosing tactical steps has raised concerns about the timeliness of policy implementation.

The government's inaction and lack of transparency have sparked doubts over whether genuine cross-ministerial or interagency coordination is taking place. Some have suggested that the government should instead roll out support measures like reduced water and electricity rates or targeted subsidies.

In an effort to prepare for US tariff scenarios, the government is considering running simulations and preparing countermeasures to help local businesses. Minister Kuo stated that such bulk-purchase discounts are common in retail and would not disrupt China Steel's pricing mechanism.

However, empty assurances from the government are not helpful for businesses at this stage. The government is facing criticism for a lack of transparency in the policymaking process regarding tariff scenarios. It is crucial for the government to provide guidance to help local companies model different scenarios and prepare strategies to withstand the looming tariff shock.