Following the Executive Yuan's announcement regarding the U.S. issuance of a new executive order—imposing a 15% tariff under Section 122 of the Trade Act—and the subsequent adjustments to exemption lists, Taiwan’s industrial sector is facing renewed volatility.

Of the 1,811 industrial products previously negotiated under the Taiwan-U.S. trade agreements, 444 items were excluded from the latest exemption list. The Ministry of Economic Affairs (MOEA) assesses that industries such as general chemicals, building materials, textiles and apparel, transportation equipment, and machinery will bear the brunt of this shift. Garment manufacturers in Changhua lamented that they have been left with "virtually no competitiveness."

Impact on the Textile and Apparel Industry
A casual brand OEM factory in Shengang, Changhua, stated that with the Section 122 surtax, export tariffs to the U.S. have reached 23.7%. This is 8.7% higher than South Korea's rate, significantly intensifying competitive pressure.

Profit Erosion: Since nearly half of Taiwan's textile mills rely on U.S. orders, and typical gross margins for garment factories hover between 20% and 25%, the 23.7% tariff effectively wipes out all profits.

Operational Strain: "We hardly dare to take orders now," the owner remarked, noting that the margin for error is so low that a single mistake could result in a net loss. Many peers in the industry have already reduced operations to just three or four days a week.

Market Uncertainty and the "European Squeeze"
A veteran textile manufacturer in Changhua noted that they had intended to resume their U.S. market expansion after confirming tariffs hadn't risen before the Lunar New Year. However, the market reversed course after the holidays with news of potential further hikes, leaving them at a loss due to the lack of transparent information.

Industry analysts highlight a secondary challenge: The "China Shift."

Chinese Expansion: Observations from recent trade fairs suggest that shifting U.S.-China tariff dynamics have pushed Chinese textile firms to aggressively pivot toward Europe.

Market Saturation: While the Taiwanese government continues negotiations with the U.S., Chinese competitors have already flooded the European market, often using low-price or "loss-leader" strategies.

Missed Windows: This aggressive entry has not only disrupted local European industries but also forced several Taiwanese mills—who had planned to diversify into Europe—to abandon their expansion plans due to poor market timing.