PwC Taiwan Proposes 3 Strategies for Taiwanese Businesses in ASEAN to Address Trump's Tariff Shock
PwC Taiwan Proposes 3 Strategies for Taiwanese Businesses in ASEAN to Address Trump's Tariff Shock
On April 2, U.S. President Trump announced a new policy enforcing reciprocal tariff rates. Although implementation has been temporarily paused for 90 days, it has already caused global trade turmoil. The uncertainty becomes the new norm in international trade. As one of the key regions exporting to the U.S., ASEAN countries swiftly responded, launching trade negotiations with the U.S. Vietnam and Cambodia were the first to express willingness to lower import tariffs on U.S. goods. Meanwhile, Thailand, Indonesia, and Malaysia have all indicated plans to increase imports from the U.S. to reduce trade deficits, and none of them plan to impose retaliatory tariffs—each is striving to find solutions to mitigate the impact of U.S. tariffs.
According to Richard Watanabe, Southeast Asia & India (SEAI) Business Leader of PwC Taiwan, the dawn of the Trump 2.0 era is placing immense operational pressure on Taiwanese businesses due to tariff increases. While ASEAN governments are actively engaging in trade talks with the U.S., the final outcomes remain uncertain. Given the unpredictable tariff landscape, Taiwanese companies must closely monitor policy developments, stay agile, and maintain flexibility in their business models to proactively implement counter-strategies.
To support Taiwanese businesses in ASEAN in responding to the Trump tariff shock, PwC Taiwan proposes 3 major strategies:
1. Trade Diversification: The Key to Breaking the Deadlock
Yii-Chian (Jerry) Chen, Partner of PwC Taiwan SEAI & India Services, suggested that businesses should actively explore international markets beyond the U.S. and identify countries with strong demand for ASEAN products. At the same time, they should make full use of existing free trade agreements (FTAs). For example, Vietnam is part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), which provide favorable trade frameworks for increasing exports to regional partners, reducing overreliance on the U.S. market, and maintaining competitiveness on the global stage.
Due to price increases caused by the tariffs, Chen also recommended that Taiwanese businesses in Southeast Asia focus on improving product quality and uniqueness. This includes reassessing supply chain configurations and production structures, centering on innovation and digital transformation, continuously upgrading their industries, and collaborating with resilient suppliers and support systems to manage production costs while boosting product competitiveness to adapt to evolving global market demands.
2. Managing Tariff Costs: Be aware of Certificate of Origin Janice Lee, Partner at PricewaterhouseCoopers Legal specializing in customs and international trade, noted that there are already significant tariff differences between China-made and non-China-made goods within the 90-day period. Once the reciprocal tariffs are fully implemented, varying rates among Southeast Asian countries will likely emerge. Since the country of origin is determined by the importing nation's regulations, and when multiple countries are involved in the production process or raw materials, it's essential to follow U.S. origin rules. Businesses are advised to seek professional analysis rather than self-assessment to avoid potential accusations of "origin laundering."
Lee further explained that the U.S. announced two rounds of exemption lists for reciprocal tariffs on April 2 and April 11. Additionally, products already subject to Section 232 tariffs are exempt from these reciprocal tariffs. To benefit from these exemptions, companies must first verify whether they have declared the correct HS codes. Incorrect declarations not only disqualify businesses from tariff reductions but also risk audits by U.S. Customs, and possible penalties.
3. Supply Chain Relocation: Carefully Assess International Tax Risks
Chia-Ying Chung, Partner of PwC Taiwan SEAI & India Services, pointed out that businesses centered on the U.S. market must now consider whether to shift to local manufacturing in the U.S., leverage the USMCA agreement, or continue using ASEAN countries with strong production and consumer capabilities as their manufacturing base. Taiwanese companies must reassess their production layouts accordingly.
In the face of rapid geopolitical changes and highly unpredictable policies across nations, companies need to manage tax risks effectively to ensure compliant operations. Taiwanese businesses should carefully explore how to enhance their tax governance strategies when expanding into non-Chinese-speaking countries and consider the governance strength gained through cross-border professional collaborations.
Richard Watanabe emphasized that Taiwanese companies must establish a sound policy-tracking mechanism. It is critical to stay informed on rapid U.S. tariff policy changes and their implications for products. However, the current U.S. tariff structure is far more complex than before and cannot be interpreted solely based on its literal meaning. Misinterpretations often lead to strategic errors. Before making key decisions, companies should consult experts to clearly understand the situation and be prepared to flexibly adjust supply chains to strengthen resilience.
