US Overtakes China as Taiwan's Top Export Destination for First Time Since 1999

Official trade statistics from Taiwan's Ministry of Finance confirm a historic economic realignment: For the first time since 1999, the United States has displaced China (including Hong Kong) as Taiwan's primary export destination. The shift, occurring in 2025, reflects both geopolitical tensions and structural changes in global technology supply chains, with artificial intelligence hardware acting as the primary catalyst.

According to the customs export data, US-bound exports reached $78.6 billion in 2025 compared to $76.2 billion for China/Hong Kong. This represents a reversal from 2022 when China/Hong Kong accounted for $120 billion versus $76 billion for the US. The 26-year high for US exports coincides with unprecedented demand for AI accelerators, advanced networking equipment, and high-performance computing components manufactured in Taiwan.

The reconfiguration stems from multiple converging factors:

1. Semiconductor Dominance: Taiwan Semiconductor Manufacturing Company (TSMC), which produces nearly 90% of the world's advanced AI chips, has accelerated US-bound shipments. Major clients like NVIDIA, AMD, and Amazon Web Services require these components for data centers powering generative AI applications.
2. US Policy Shifts: The CHIPS Act and escalating restrictions on advanced technology exports to China redirected investment flows. TSMC's $40 billion Arizona fab expansion, while not yet operational, influenced supply chain decisions.
3. Decoupling Pressures: Many US firms established "China+1" procurement strategies following pandemic-era disruptions and national security concerns, relocating final assembly operations from mainland China to Mexico and Southeast Asia.

However, the data reveals nuanced limitations:

• Commodity Mix Disparity: Exports to China remain dominated by intermediate goods like display panels and mid-tier semiconductors, while US shipments feature higher-value AI processors and server components. The average value per kilogram of US exports is approximately 3.2x higher than China-bound shipments.
• Geographic Accounting: Hong Kong's role as a transshipment hub historically inflated China figures. Recent customs enforcement reduced rerouting, but an estimated 15-20% of "US exports" still transit through third countries.
• Demand Volatility: AI infrastructure spending shows signs of plateauing. Q4 2025 saw month-over-month declines in chip exports despite year-over-year growth, suggesting potential market saturation.

Taiwan's Ministry of Economic Affairs cautions against overinterpretation. "While AI drove this milestone, traditional electronics like PCs and smartphones still constitute 38% of exports," a spokesperson noted. "The US advantage could narrow if consumer demand recovers faster than enterprise AI investment."

The shift carries geopolitical weight. Since 2016, China absorbed over 25% of Taiwan's exports annually, creating economic interdependence that tempered cross-strait tensions. With that leverage diminished, analysts at the Chung-Hua Institution for Economic Research warn of increased vulnerability to US market fluctuations. Taiwan's export concentration risk index—measuring reliance on top trading partners—has reached its highest level since 2000.

Long-term sustainability remains uncertain. Rising production costs in Taiwan and competing investments in US domestic chip capacity could erode the advantage by 2027-2028. For now, the data provides concrete evidence of how AI hardware is rewriting global trade patterns.