To resist Trump’s tariffs, machine tools are not planned to be shipped temporarily. In response to the impact of reciprocal tariffs in the United States, major domestic machine tool manufacturers including Chengtai (1583), Gao Feng (4510) and Heda (1536) have emphasized that Taiwanese products are cost-effective and irreplaceable. If the tariff rate transfer cannot be negotiated, or customers cannot share the additional costs, they may respond by "temporarily not shipping".
The United States announced a 32% reciprocal tariff on Taiwanese goods. Taichung Mayor Lu Xiuyan said yesterday (7th) that Taichung is an industrial center, including machinery, hand tools, bicycles, etc., which will have a great impact. Some manufacturers have reported that they have abandoned orders or suspended shipments, and domestic machine tool manufacturers have also successively proposed response strategies.
Yang Dehua, chairman of Chengtai Group, pointed out that in the face of the substantial increase in U.S. tariffs, the group has prepared relevant response strategies. He first emphasized that the group currently has 5,000 to 6,000 square meters of land and warehouses in the United States, as well as approximately US$15 million in inventory, which can meet market demand until the end of this year. If the tariff rate cannot be negotiated, the group will not rule out setting up a factory in the United States.
As for the products that have been shipped, the company has reached an agreement with customers and the customers will absorb them themselves; for the products that have not been shipped, the company will also negotiate with customers for "half per person". The current tariff rate levied on Taiwan's machine tool exports to the United States is about 4.7%. Calculated by a 32% increase, the extra 27.3% is about 13.6%.
Yang Dehua emphasized that Taiwan's machine tools are of high quality and cost-effective. If the customer does not agree to deliver more than half of the products, the group will consider not shipping them. In addition, in addition to the domestic demand market, mainland factories will also demand "Taiwanese quality, mainland prices" and actively attack non-U.S. markets such as Thailand, Malaysia, Vietnam, Indonesia, and Spain and Mexico.
Shen Guorong, chairman of Heda Group, pointed out that "coordinating with customers to share tariff costs does not apply to Heda." He emphasized that Heda's biggest competitor is China, but China's tariffs are heavier than Taiwan's, and the minimum time for auto parts certification is one year, so Heda still has room for full transfer.
For Gaofeng, its major machine tool manufacturer, since the gross profit margin is only 20% to 25%, it is impossible to share half of the tariff costs with customers, otherwise the sales, management and research expenses will not be enough, and Gaofeng's sales ratio to the United States is only about 3%. In the worst case, Gaofeng can choose to abandon the U.S. market and instead attack other non-U.S. markets such as Europe, Asia, and Türkiye.
Zhuo Yongcai, President of Shanghai Banking Group, said that Shanghai Banking Group’s sales to the United States account for less than 4%, and the main products it sells are ball screws, linear slide rails, etc., which are highly customized products with very low substitutability. Shanghai Banking Group has currently negotiated with customers to share the cost of increased tariffs. Preliminary assessment shows that the related impact will not be large.
