Taiwan Exports to Mexico jumped almost 500% last month

[Daniel Nenni]

Taiwan’s exports to Mexico surged to a record level as tech companies moved production out of China, but the trade now faces uncertainty following US threats of higher tariffs on its neighbor.

Taiwanese exports to Mexico jumped 479 percent last month from a year earlier to reach US$2.7 billion, official data showed. This is mainly driven by shipments of graphic processing units, a key components of artificial intelligence (AI) servers.

The Ministry of Finance in a statement on Friday said the surge was largely due to supply chain shifts, as companies like Hon Hai Precision Industry Co (鴻海精密) — also known as Foxconn Technology Group (富士康科技集團) — and Wistron Corp (緯創) have been building factories in Mexico to assemble AI servers destined for the US.

Cargo containers are pictured stacked at the Port of Kaohsiung on April 30 last year. Photo: CNA

The trade now seems at risk after US President Donald Trump announced late last month that he would impose 25 percent tariffs on imports from Mexico and Canada. The decision was later delayed for 30 days after last-minute negotiations, but the threats have caused stock prices of Taiwanese tech companies to plunge.

Last month, Trump also announced plans to impose 100 percent tariffs on computer chips from Taiwan. Minister of Economic Affair J.W. Kuo (郭智輝) on Saturday said that a group of officials would travel to the US to meet with Trump administration officials to try and stop the tariffs from being implemented.

In addition, Taiwan is preparing to buy more liquefied natural gas (LNG) from the US to reduce its trade surplus and potentially avoid higher tariffs.

State-owned CPC Corp, Taiwan (CPC, 台灣中油) and the ministry are in negotiations with an Alaska-based export plant for supplies, state-run Central News Agency reported on Sunday, citing an unidentified ministry official.

Trump on Friday said Japan would buy a record volume of US LNG, following a meeting with Japanese Prime Minister Shigeru Ishiba at the White House.

Last year, Taiwan imported about 10 percent of its LNG from the US, with most shipments arriving from Australia and Qatar under long-term supply contracts, official data showed.

Exports to Mexico jumped almost 500% last month - Taipei Times

Bringing Taiwan to the World and the World to Taiwan

www.taipeitimes.com

 

[Daniel Nenni]

It is all about balancing trade.......

The U.S. monthly international trade deficit increased in December 2024 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit increased from $78.9 billion in November (revised) to $98.4 billion in December, as imports increased and exports decreased. The goods deficit increased $18.9 billion in December to $123.0 billion. The services surplus decreased $0.6 billion in December to $24.5 billion.

 

[ai268]

OK then, can US-made electronic products compete in the world market beyond USA? US companies should learn the lessons from Apple II and IBM PC in the early '80, not TSMC established yet then. Since Apple II, Steve Jobs made all Apple products closed domain. Where was the original IBM PC now? Who made Apple II clone & IBM PC compatible in the '80 and drove Apple & IBM PC into the ground?

Taiwan is NOT just TSMC. Look at your electronic devices at home, in the office and data center - desktop, laptop, server, network switches, streaming devices, peripherals , etc... How may % of them are made in Taiwan or in China or other countries by Taiwanese companies?

1. Your desktop - MB, switching power supply, chipsets, PCI cards... Who make those components?
2. HP, Dell, IBM, SuperMicro, Cisco routers & switches, Nvidia & AMD cards. Who make those desktop, laptop and server?
3. Google devices, Apple devices. Who make those phones, watches, cameras, streaming devices, IOT devices?
4. Trump $500 billion shining building, X-AI, Google, Microsoft, FB & Amazon Data Center. Who make those servers?
5. About design, RealTek (Crab) ethernet chips & audio chips are embedded in 80% of commodity MB. Which country?
6. MediaTek cell phone chips, competing with Qualcomm - Which country?

It's been 40 years from Apple II clone and IBM PC compatible to today's AI servers, 40 years !

Trump is frustrated and every politician in G7 and China are frustrated. It's just beyond every politicians' imagination why my mighty industries complex depend on a Pacific "rim" tiny island with only 23M people. Why? If they dig further and deeper, they will be more frustrated and get higher blood pressure. Look at China's current economics. When Taiwanese companies leave China, attributed to Trump's tariff, China suffers, NOT? Why China blocks Foxconn departure to India?

Can US bring those 3%-4% profit margin jobs back to US? Absolutely NOT. Why not? Even Taiwan younger generation do NOT want to work in the factories. That's why Taiwan issues so many, hundreds of thousands, temporarily work visa to South East Asian countries.

Therefore, what are Trump/USA options? Chip does NOT run on its own. Not Taiwan, not Mexico, not Vietnam, not South East Asia.
Where do those servers inside the $500B "Shining Building" come form? - Over budget, projects delayed. Sound familiar?

Can Taiwan survive without TSMC? Maybe. Can US survive without Taiwan in the next four years???

 

[Paul2]

Trump is very unpredictable, and "build factories in Mexico" was yesterday's advise given by allegedly well connected BCG consultants.

How it will go from there? I believe that even in the case of a wild swing away from Trumpism, the next admin will be very cautious and calculating (just like any recent US administration,) and they will avoid touching tariffs because they proved to be surprisingly popular. The latent hatred of Catholics is way stronger than anything Americans have on Middle Easterners, Japanese, or Chinese/Russian communists.

 

[XYang2023]

I believe the U.S. strategy is correct from a long-term perspective. If we look at Taiwan, there are no intrinsic advantages. One might argue that its key differentiator is human capital, but in the context of generative AI, this advantage can be replicated cost-effectively elsewhere.

Therefore, the main factors in deciding where to build fabs are likely natural resources, compute power, and proximity to end markets. From this standpoint, it makes sense to begin constructing fabs in the U.S.

Tariffs are a necessary tool to help initiate this transition.

 

[XYang2023]

As companies develop a separate supply chain in Mexico, reliance on Taiwan can be reduced. I used to have a Bose Bluetooth speaker that was made in Mexico.

Thus, you could have the U.S. producing chips while Mexico manufactures end products.