TAIPEI (Taiwan News) — Taiwan-US tariff negotiations have reportedly stalled, with Washington demanding substantial additional investments on a similar scale to Japan,  with only vague tariff relief in return.

According to Bloomberg, talks between Taiwan and the US have entered a critical phase, with Taiwanese officials racing to secure tariff relief before a July 31 deadline to avoid punitive tariffs as high as 32%. Thus far, however, the Trump camp has only proposed a “best rate tariff” without clarifying the actual rate.

Sources familiar with the negotiations say Taiwan estimates the rate may be similar to Japan’s 15%. The report notes that Washington is using Japan's pledge to establish a US$550 billion (NT$16.33 trillion) fund in the US as leverage to squeeze more investments out of Taiwan.

As US-China trade talks continue, there are growing concerns that the Trump administration might offer Taiwan as a bargaining chip in exchange for concessions from Beijing. Ja Ian Chong, an associate professor at the National University of Singapore, said President Lai Ching-te’s (賴清德) political fortunes hinge on the trajectory of US-China negotiations.

“The biggest issue for Lai now is China’s trade talks with the US, and whether the Trump administration makes concessions to Beijing that put Taiwan’s interests on the line,” said Chong. He added, “That would create far greater challenges for Lai and his administration.”

Lai also faces another threat: Trump’s proposed tariffs on semiconductors. Ma Tieying (馬鐵英), senior economist at DBS Bank, pointed out that because of Taiwan’s dominance in the chip industry, the country could still pass on the extra costs to US consumers.

However, if Washington pushes Taiwan to shift more chip production to the US, it could pose a longer-term risk to the country's “silicon shield," the concept that global reliance on Taiwan's semiconductors would prompt Western intervention if China invaded.