The US president had threatened to hit the island with a 32% tax and possible duties on semiconductor chips.
After four rounds of face-to-face negotiations and multiple video conferences, Taipei and Washington were still trying to strike a deal, Taiwanese President Lai Ching-te said on Facebook.
“The US has announced a temporary 20% tariff for Taiwan, with the possibility of further reductions should an agreement be reached,” Lai said.
“The government will continue to strive for a reasonable tariff rate and complete the final stages of the tariff negotiations.”
Export-dependent Taiwan is a global powerhouse in chip manufacturing, with more than half the world’s chips and nearly all of the high-end ones made there.
Soaring demand for AI-related technology has fuelled its trade surplus with the US – and put it in the crosshairs of Trump’s tariff blitz.
Around 60% of Taiwan’s exports to the US are information and communications technology, which includes chips.
To avoid the punitive tariffs, Taipei has pledged to increase investment in the US, buy more of its energy and increase its own defence spending.
While Washington does not recognise Taiwan as a country, it is the democratic island’s most important backer and biggest arms supplier.
Taiwan “will continue to actively negotiate with the US to reach an agreement and promote Taiwan-US economic and trade cooperation”, the cabinet in Taipei said Friday.
Trump in April imposed a 10% tariff on almost all US trading partners, while announcing plans to eventually hike this level for dozens of countries.
But days before the steeper duties were due to take effect on July 9, he pushed the deadline back to Aug 1.
Taiwan’s vice president Hsiao Bi-khim said recently that the government wanted a trade deal with Washington that “will benefit both sides”.
“The US is indeed a very important trade partner for Taiwan,” Hsiao said.
Washington also “needs Taiwan in supporting resilient supply chains, in supporting manufacturing and some high-end technologies”.
In the weeks leading up to Aug 1, several economies – the EU, Britain, Vietnam, Japan, Indonesia, the Philippines and South Korea – struck pacts with Washington, while China managed to temporarily lower tit-for-tat duties.