TAMI Sounds Alarm as China Axes Tariff Benefits

China has announced the suspension of ECFA tariff benefits for Taiwan's machinery products, prompting concern from the Taiwan Association of Machinery Industry (TAMI). "The most unfortunate outcome has occurred," TAMI lamented. Preliminary estimates suggest the impact will extend beyond losing 8% to 10% tariff benefits; the most significant consequence will be a decline in market share for Taiwan's machinery products in China. This move is expected to shrink the profits and competitiveness of Taiwanese manufacturers.

TAMI Chairman Chuang Ta-Li expressed concern over the unstable global political and economic situation, highlighting the depreciation of the Japanese Yen and Korean Won. The suspension of ECFA tariff concessions for Taiwan's machinery products exacerbates these challenges. Industry insiders caution that people should brace themselves for a potential downturn. Fortunately, in response to persistent rumors over the years about the suspension of ECFA, Taiwan's machinery industry has been working to diversify its export markets. As a result, the proportion of exports to China has decreased from 30.9% in 2021 to 23.5% in 2023.

According to TAMI's analysis, Taiwan's machinery exports to China under the 2023 ECFA list amounted to approximately $2.8 billion. If product tariffs revert from 0% to 8%-10%, it is expected to impact the export competitiveness and profit margins of relevant Taiwanese manufacturers. The market share of these products in China could initially decline by 4%-5%, leading to an estimated reduction in export value of $110 million to $140 million, which represents about 0.5% of the total value of machinery exports in the short run. However, if the market share continues to decline, the losses could become even more significant.

Furthermore, individual companies will experience varying degrees of impact on their exports, with power transmission system manufacturers likely facing greater export competition pressure.