In recent years, Taiwan has steadily climbed the ranks of the United States’ major trading partners. Between 2018 and 2021, the value of two-way merchandise trade increased by 50%, from US$76 billion to US$114 billion, according to US government data. This growth has allowed Taiwan to move up one notch each year in the ranking of the main trading partners of the United States – from 11th place in 2018 to 10th in 2019, 9th in 2020 and 8th in 2021 – thus surpassing more populated countries like France, India, Italy and Vietnam. In 2021, Taiwan accounted for 2.5% of all US trade, up from 1.8% in 2018.

Last year, the United States’ top trading partners were neighbors Canada and Mexico, followed by China, Japan, Germany, Korea and the United Kingdom.

The trade balance has remained consistently in Taiwan’s favor, with the size of the Taiwanese surplus growing from US$15.6 billion in 2018 to over US$40 billion last year.

Besides normal organic growth, changes in global economic conditions have played a role in Taiwan’s increasing importance as a trading partner of the United States. One factor has been the Trump administration’s imposition of heavy tariffs on many Chinese-made products in retaliation for intellectual property theft and other unfair Chinese trade practices. As a result, many Taiwanese companies in China have chosen to move some manufacturing operations to other locations. The Taiwanese government has provided incentives to encourage “relocation” to Taiwan. When companies that returned to Taiwan then exported to the United States, the value of trade shifted from the US-China trade register to that of the United States and Taiwan.

The scourge of COVID-19 has also had its impact. With so many people spending more time at home – whether due to work-from-home policies, quarantines and lockdowns, or a desire for more self-protection – the demand for home office equipment and home entertainment has exploded. Taiwan was a major supplier of finished consumer electronics and semiconductor chips and other components needed to produce them.

So far in 2022, two-way trade has continued to grow at a healthy pace, with two-way trade between Taiwan and the United States amounting to $65 billion for the first half of the year. But while Vietnam and India have regained slightly higher positions than Taiwan, it is unclear whether the end of the year will again see Taiwan rank eighth.