The "US-Taiwan Trade Agreement" is in reality an economic trap that hollows out Taiwan

Editor's note: Xue Tianhang is an associate researcher at the Institute for National Strategy and Regional Development, Zhejiang University; The article reflects the author's opinions and not necessarily the views of CGTN.

On February 13, China's Taiwan region and the United States signed a so-called "reciprocal trade agreement," lowering tariffs on Taiwan's exports to the US to 15 percent. However, as indicated by the substance of the agreement, the purported "reciprocity" amounts to a highly unequal transaction, for which Taiwan has paid a heavy price.

First, the aggressive dismantling of trade barriers could deal a severe blow to Taiwan's local industries and may trigger a wave of unemployment. According to information released by the Office of the United States Trade Representative, Taiwan will eliminate or reduce 99 percent of tariff barriers and has also pledged to address long-standing non-tariff barriers affecting US exports of automobiles, medical devices, and pharmaceuticals. These provisions have prompted widespread concern among residents on the island of Taiwan. Huang Kuo-chang, chairman of the Taiwan People's Party, stated that based on the text released so far, the agreement goes far beyond an exchange of $500 billion in investment for a 15 percent tariff rate. It will also involve large-scale procurement from the US and extensive market liberalization, which could inflict substantial shocks on local industries.

Second, the bundling of US goods purchases will seriously weaken Taiwan's bargaining power and increase the burden on its people. According to disclosures by the Office of the United States Trade Representative, between 2025 and 2029, Taiwan will purchase $44.4 billion worth of natural gas and crude oil, $15.2 billion worth of civil aircraft and engines, as well as $25.2 billion worth of power-related equipment and others from the US. These products could otherwise have been sourced on the international markets on a cost-effective basis, but are now being bundled by the US without regard to price or even necessity. The Taiwan People's Party criticized the agreement as "hollowing out Taiwan without restraint". Huang Kwei-bo, a professor at National Chengchi University, argued that the negotiations were conducted behind closed doors by the authorities of the Democratic Progressive Party (DPP), while the resulting impacts would ultimately be borne by the entire population of Taiwan.

Third, increased investment in the US could lead to the relocation of Taiwan's "lifeline" industries off the island, thus jeopardizing its long-term development prospects. According to a report by Taiwan.cn, Taiwan semiconductor firms are required to commit at least $250 billion in additional direct investment in the US, with equivalent credit guarantees to be provided by the DPP authorities. This would effectively force Taiwan to relocate 40 percent of its semiconductor supply-chain capacity to the US, placing its economic lifeline in American hands. Ecns.cn, citing an editorial from Taiwan-based United Daily News, noted that Taiwan's pledged investment in the US amounts to $500 billion, more than half of its annual GDP, making the risks self-evident.

In stark contrast to what is characterized as the US's self-serving and bullying practices, the Chinese mainland has consistently sought to enhance the well-being of compatriots on both sides of the Taiwan Strait and to strengthen the Chinese national economy. In recent years, the mainland has continued to improve institutional arrangements and policies to promote cross-Strait economic and cultural exchanges and cooperation. According to the latest data released by the Taiwan Affairs Office of the State Council, 6,423 new Taiwan-funded enterprises were established on the mainland in the first ten months of 2025, with actual utilized Taiwan capital hitting $1.75 billion, up 53 percent year-on-year. Cross-Strait trade volume reached $285.395 billion from January to November 2025, up 7.3 percent year-on-year. The mainland has also introduced a series of policy measures to facilitate cross-Strait travel and promote economic exchanges and cooperation. From January to November 2025, the Mini Three Links operated 10,997 voyages, a year-on-year increase of 38.69 percent, totaling 1.75 million passenger visits, up 45.77 percent year-on-year.

History has repeatedly demonstrated that only by integrating into the broader framework of cross-Strait cooperative development can Taiwan truly achieve sustainable development and effectively safeguard the well-being of its people. As a spokesperson for the Taiwan Affairs Office of the State Council has pointed out, by allowing the United States to make whatever demands it wishes, the DPP authorities are sacrificing Taiwan's industrial development prospects and undermining the interests and well-being of people in Taiwan, actions that will inevitably be condemned by the public.