Ⅰ. Shock and Realignment: Tariff as Strategic Wake-up Call

On April 2, 2025, U.S. President Donald Trump signed Executive Order No. 14257, implementing a sweeping “reciprocal tariffs” policy. While framed as a move toward global trade balance, it was widely perceived as targeting China. Taiwan, however, was blindsided: slapped with a 32% tariff—higher than Japan (24%), South Korea (25%), and even China (34%). A global base tariff of 10% was also imposed, effective April 5.

Just six days later, Trump dramatically escalated tariffs on Chinese imports to 145%, with the increase staged over two days. China retaliated with 125% tariffs on U.S. goods and suspended rare earth exports. Tensions escalated until a tentative agreement was reached in Geneva on May 12, 2025. Taking effect on May 14, the accord committed both sides to temporarily lower tariffs—30% for the U.S. and 10% for China—during a 90-day window for renewed negotiations.

For Taiwan, this sequence of events sent a painful message: despite decades of pro-U.S. alignment, it remains vulnerable to collateral damage in U.S.-China power plays. The issue is not merely about percentages—it is about perception. Taiwan found itself lumped with strategic rivals, not treated as a trusted partner. The slap in the face eroded confidence in America’s commitment to value-based alliances and cast doubt on the supposed solidarity of democracies.

Ⅱ. Trump’s Media-First Strategy and Its Fallout

Trump’s trade strategy is rooted less in long-term strategic coherence and more in media spectacle. Unlike Nixon’s deliberate diplomacy, Trump’s approach is tactical, transactional, and image-driven. Tariffs become performance tools—symbols of dominance more than tools of structured negotiation.

The market response was revealing. After the April 2 announcement, the Dow Jones plunged over 2,000 points. But following Trump’s Geneva declaration of a “deal” on May 12, markets rebounded, erasing losses. In Trump’s worldview, this validates his style: if the market rallies and headlines confirm his toughness, America wins—irrespective of global dislocation.

This unpredictability creates systemic risk for allies. Taiwan, in particular, was caught in a policy fog—unable to anticipate, influence, or respond in real time. The larger damage lies not only in trade losses but in the realization that loyalty does not translate into strategic immunity.

Ⅲ. Rules-Follower or Rule-Maker? Taiwan’s Currency Test

Trump’s erratic policy style exposed a deeper dilemma for Taiwan: the disjunction between moral alignment and strategic agency. For decades, Taiwan embraced the role of a model ally—democratic, rules-abiding, transparent—believing such credentials would translate into protection. The tariff episode proved otherwise.

Taiwan’s response—an NT$88 billion (USD 2.7 billion) relief package and diplomatic overtures at the APEC Trade Ministers’ Meeting in Jeju—was swift but ultimately reactive. The deeper issue is Taiwan’s position in the global order: it follows rules but does not shape them.

Amid sharp regional currency fluctuations in May 2025, Taiwan and South Korea diverged sharply. The Bank of Korea publicly acknowledged appreciation pressure on the won and signaled readiness to intervene. This assertiveness protected the Korean export sector and reinforced policy autonomy. By contrast, despite the New Taiwan dollar surging from 33 to 30 per USD in two days, Taiwan’s central bank refrained from naming the pressure or signaling intent. It opted instead for mild interventions, avoiding escalation.

This silent compliance stands in contrast to South Korea’s proactive stance. Taiwan’s reluctance to assert monetary sovereignty reflects a broader pattern of strategic deference—prioritizing relations with Washington over autonomous signaling. It underscores a recurring pattern: Taiwan absorbs pressure but resists politicizing it.

Ⅳ. Strategic Asymmetry and Public Discontent

This posture, however, is increasingly unsustainable. Taiwan faces growing domestic unease over asymmetric dependence on the U.S. Repeated snubs—exclusion from IPEF, harsh tariffs—are fueling calls for a more balanced foreign policy. Civil society, technocrats, and younger voices are demanding not just alignment, but agency.

Political leaders must now navigate a dual challenge: preserving U.S. engagement while responding to constituents’ demands for reciprocity and dignity. Taiwan’s foreign policy cannot rely solely on moral arguments; it must be framed as a mutually beneficial partnership. Democracies need not only shared values, but shared interests—and those interests must be visibly structured and defended.

Ⅴ. From Values to Leverage: Reframing Taiwan’s Role

Trump rewards negotiators, not students. Taiwan must outgrow its “model ally” persona and speak the language of strategic value. It must quantify its indispensability—semiconductors, cybersecurity resilience, and geostrategic location—as investments worth securing.

Supporting Taiwan is not about moral clarity; it’s about strategic calculus. A stable Taiwan secures global chip supply. A democratic Taiwan strengthens Indo-Pacific resilience. These truths must be communicated in terms that resonate in Washington: price, scarcity, and consequence.

Taiwan must develop new talking points, train commercial diplomats, and engage think tanks to translate democratic alignment into quantifiable benefit. Sentiment must be structured into strategy.

Moreover, Taiwan must articulate the costs of abandonment. What happens to global supply chains if Taiwan’s chip capacity falters? What are the regional risks if Taiwan is destabilized? These must be presented not as abstract fears, but as concrete scenarios in cost, risk, and alternatives.

Ⅵ. Hedging and Regional Anchoring

To mitigate strategic exposure, Taiwan must institutionalize regional hedging. Engagements with Southeast Asia, India, Japan, and Australia must evolve beyond symbolism into structured cooperation—on digital governance, energy transition, and strategic infrastructure. ASEAN’s growing importance in global trade and climate coordination presents opportunities for Taiwan to build durable partnerships.

In the Global South, Taiwan should pivot from aid optics to policy credibility. While it cannot match China’s financing, it can deliver targeted expertise and governance partnerships in areas such as e-government, anti-corruption systems, and disaster resilience. This form of soft power builds institutional trust and helps Taiwan remain relevant amid geopolitical competition.

Ⅶ. From Beneficiary to Strategic Stakeholder

Taiwan must rebrand itself not just as a stakeholder, but as a value generator in global innovation and security. This includes embedding Taiwan into secure tech corridors, cybersecurity coalitions, and bilateral economic agreements. Concretizing its strategic assets can ensure Taiwan is seen as integral—not auxiliary—to Indo-Pacific stability.

To do this, Taiwan’s diplomatic apparatus must invest in data, advocacy, and institutional capacity. Policy modeling, cost-benefit simulations, and tailored lobbying strategies are no longer optional—they are essential. Structural alliances—not personality-driven headlines—are the future.

Taiwan should also pursue quasi-treaty mechanisms, such as sector-specific MOUs on semiconductor security, clean energy technology exchange, and dual-use R&D initiatives. These allow Taiwan to function as a node of trust in key strategic sectors.

VIII. Rethinking U.S. Market Engagement: Navigating the 50-State Risk

Taiwanese firms expanding into the U.S. must confront the reality of 50 different jurisdictions. Labor laws, incentives, and infrastructure vary widely from state to state. Echoing past missteps in Southeast Asia under the New Southbound Policy, insufficient due diligence could lead to regulatory gridlock.

The government must support outbound investment with legal briefings, political risk assessments, and sector-specific guidance. A blanket “Go to America” policy is obsolete. What’s needed is targeted, state-level, risk-calibrated engagement. This includes identifying high-tech industrial zones, understanding labor compliance in union-heavy states, and aligning with regional supply chain hubs.

More importantly, Taiwan should integrate U.S.-based Taiwanese firms into its strategic messaging. Companies like TSMC Arizona or AUO’s energy ventures can serve as proof points of bilateral commitment and reliability. These investments must be narrated as part of a shared infrastructure of security and innovation.

Ⅸ. What Next: From Reactive Positioning to Strategic Design

To move beyond reactive diplomacy, Taiwan must institutionalize a national strategy that explicitly translates its democratic resilience and technological indispensability into strategic capital. This requires forming a standing inter-agency task force—comprising officials from foreign affairs, economic planning, and national security—to align diplomatic messaging with industry incentives. Taiwan should proactively identify the strategic returns it expects from key allies and embed these expectations into bilateral dialogues, rather than awaiting external recognition. A value-based partnership begins with value articulation.

Second, Taiwan must strengthen its ability to quantify and communicate its strategic contributions. This includes commissioning independent cost-benefit impact assessments on the risks of Taiwan’s marginalization in global supply chains or regional security frameworks. These assessments can inform targeted lobbying in key capitals such as Washington, Brussels, and Tokyo. Taiwan should train commercial diplomats fluent in both security and economic discourse to lead negotiations that assert Taiwan not just as a moral cause, but as a strategic necessity.

Ⅹ. Conclusion: From Admiration to Necessity

Taiwan must not settle for being admired — it must insist on being needed. In a world driven by strategic utility, relevance is not granted but asserted. Taiwan’s survival depends not just on being right, but on being indispensable.

To endure, Taiwan must learn to name its price—clearly, publicly, and confidently. Strategic presence is not about permission. It is about position. Taiwan must stop waiting for a seat and start designing the table.