Taipei vows crackdown on fake ‘Made in Taiwan’ labels as fresh US tariff threats loom

TAIPEI – Taipei has repeatedly vowed to ensure that it does not become a place for Chinese exporters to dodge US tariffs with fake “Made in Taiwan” labels, as the island seeks to strengthen its position in trade talks with Washington.

“MIT (Made in Taiwan) must be MIT. Taiwan must uphold the lines of defence and not become a loophole,” Premier Cho Jung-tai said in an April 13 speech to leaders representing various industries.

Calling on companies to work with the government to safeguard Taiwan’s economic security, he said that Taipei would step up preventive measures, intensify Customs inspections, and impose strict penalties for offenders to tackle what he termed “origin laundering”.

The practice refers to Customs fraud involving a false origin claim – when exporters misrepresent the true origin of goods – which is often done to take advantage of preferential trade agreements or avoid high tariffs.

Mr Cho made the speech days after Taiwan’s Economic Affairs Minister Kuo Jyh-huei brought up the same issue on April 11 in the legislature, where the latter suggested creating a public blacklist of violators.

“We will increase our publicity outreach efforts with companies and remind them that this practice (of origin laundering) could potentially affect the US’ judgment of Taiwan,” Mr Kuo said.

Taipei, whose economy is heavily reliant on exports, is scrambling to show Washington that it takes trade rules seriously as the spectre of hefty US tariffs looms. The US is also Taiwan’s most important security backer against Beijing, which claims the self-ruled economy as its territory and has in recent years ratcheted up military, diplomatic and economic pressure on the island.

“Trust is the currency that Taiwan is protecting, and the crackdown on origin laundering is part of building that trust,” said Professor Julien Chaisse, an international law and trade expert at City University of Hong Kong.

“It says, plainly, that Taiwan won’t allow its system to be used for someone else’s trade war,” he told The Straits Times.

Taiwan had been due to be hit with a 32 per cent tariff by US President Donald Trump on April 9 until he made a sudden about-turn and said he would

temporarily lower duties on dozens of economies for 90 days

to make way for talks to take place.

For China, however, Mr Trump further ramped up the pressure, effectively raising US tariff rates for the country to 145 per cent.

These measures have led to concerns that China-based exporters could attempt to avoid US tariffs by misrepresenting their true origin in nearby Taiwan, such as through false labelling or illegally re-routing goods via a third location to conceal where they were actually manufactured.

There have been instances where this has happened in the past.

According to government data, 133 such cases have been recorded in Taiwan since 2018, when Mr Trump slapped punishing tariffs on China during his first term in office. Some of the Chinese goods identified to have had fake origin labels included metal screws, solar products and bicycles.

Taiwan’s clampdown on origin labelling also comes amid an ongoing proposal by the opposition Kuomintang (KMT) party to turn Taiwan’s outlying Kinmen islands, located just 3km from China’s coast, into a free trade zone aimed at facilitating cross-strait trade.

KMT lawmakers argue that the proposal would benefit Kinmen residents and their economy, but critics say that it would only make it easier for businesses in China to misrepresent the origin of their goods as Taiwanese.

“Some Taiwanese businesses from Kinmen have bases in China, and their cross-strait business ties are closely integrated, which increases the possibility of origin laundering,” said legislator Tsai Yi-yu of the ruling Democratic Progressive Party.

“If Taiwan is identified as a springboard for China to ship products through a third location, Taiwan may face unimaginably high tariffs in the future,” he said.

Taipei held its first round of trade negotiations with Washington on April 11, which Taiwan President Lai Ching-te described as having gone smoothly.

“As long as the government and opposition parties cooperate and the people of the country unite and respond together, we will be able to successfully overcome difficulties,” Mr Lai said at an event on April 12.

“Although we may have to face the impact of US reciprocal tariffs, we don’t need to panic too much. Taiwan’s economic industry is resilient.”