Taiwan is one of the world’s most critical economies, primarily due to its dominance in the semiconductor industry. Taiwan Semiconductor Manufacturing Company (TSMC) produces the world’s most advanced chips, which are heavily relied upon by Western technology giants such as Nvidia and Apple. However, in recent years, a growing controversy has emerged regarding Taiwan’s trade with Russia, particularly following Russia’s invasion of Ukraine.
The Impact of Western Sanctions on Trade with Russia
When Russia invaded Ukraine, Western nations, led by the United States, imposed severe sanctions on Moscow. These included restrictions on semiconductor exports to Russia and the importation of Russian goods. As a result, trade between Russia and Western countries, such as the United States and Germany, saw a significant decline. In 2021, the United States imported $30.8 billion worth of goods from Russia, but by 2024, this figure had plummeted to just $3.27 billion. Similarly, Germany, one of Russia’s largest European trade partners, saw its imports from Russia decline from $31.2 billion in 2022 to just $4.26 billion in 2023.
Taiwan, aligned with the West, followed suit by reducing its exports to Russia. In 2021, Taiwan’s exports to Russia totaled over $1.3 billion, but by 2022, they had dropped to $855 million. This downward trend continued, with exports falling to $793 million in 2023 and further declining to $599 million in 2024. This decline can be attributed to Western sanctions as well as voluntary decisions by Taiwanese firms to withdraw from the Russian market.
Taiwan’s Imports from Russia: The Contradiction
While Taiwan’s exports to Russia have dropped significantly, its imports from Russia have remained stable. In fact, despite sanctions and political pressure, Taiwan continues to purchase Russian goods at a consistent level. By 2024, Taiwan had imported over $4.5 billion worth of goods from Russia, a figure that has raised concerns among Western allies.
From a broader perspective, Taiwan’s trade with Russia remains small compared to its top trading partners. For example, China leads Taiwan’s imports with a staggering $176 billion in trade. However, the problem lies not in the volume of trade but in what Taiwan is importing from Russia.
Taiwan’s Growing Reliance on Russian Fossil Fuels
One of the most significant concerns is Taiwan’s increasing dependence on Russian fossil fuels, particularly coal and oil. These commodities are crucial to Taiwan’s energy sector, given that the island lacks natural resources. Many experts argue that Taiwan has no choice but to rely on imports for its energy needs, and Russian coal is an attractive option because of its lower cost.
Data shows that Taiwan’s reliance on Russian coal has grown substantially over the past few years. In 2022, Russia accounted for 12% of Taiwan’s total coal imports. By 2024, this number had increased to 18%.
Interestingly, this increase is not due to Taiwan’s state-owned electricity provider, Taipower. In September 2022, Taipower officially ceased purchasing Russian coal in response to Western sanctions. However, private Taiwanese companies stepped in to fill the gap, significantly increasing their imports from Russia.
A report by the Centre for Research on Energy and Clean Air highlighted that Taiwanese companies are among the largest buyers of Russian coal. One of the key reasons is cost—Russian coal is approximately 22% cheaper than non-Russian alternatives, with an average price of $180 per tonne compared to $230 per tonne for non-Russian coal.
The Hidden Trade: Taiwan’s Indirect Exports to Russia
Beyond fossil fuel imports, investigative reports have revealed that certain Taiwanese exports are still making their way into Russia, often through indirect routes. Despite official sanctions, Taiwan has continued to export key industrial materials to Russia, particularly machine tools, semiconductor-related materials, and chemicals.
1. Machine Tools and Metalworking Equipment
One of Taiwan’s major exports to Russia before the invasion was machine tools and metalworking equipment. Even after sanctions, reports indicate that Taiwanese-made machine tools are still reaching Russia via third-party countries. For instance, in 2023, Turkey became the largest buyer of Taiwanese machine centers, with approximately half of these units believed to have been re-exported to Russia. This means that while direct exports from Taiwan to Russia have decreased, the products are still being indirectly supplied.
2. Semiconductor-Related Materials
Taiwan is a global leader in semiconductors, and following the invasion, TSMC officially cut off its Russian clients. However, reports suggest that while finished semiconductors are no longer being shipped, related materials continue to reach Russia. A 2024 investigation found that Taiwanese firms had supplied Russia with silicon wafer plates, which are essential for microchip fabrication. One Taiwanese company reportedly sold $2.2 million worth of wafer plates to a Russian semiconductor firm, Epiel, which supplies military enterprises. These components have been linked to Russia’s production of military equipment such as Iskander missiles and S-300 air defense systems.
3. Chemical Exports
Another controversial export is nitrocellulose, a chemical that can be used in manufacturing smokeless gunpowder and propellants. Reports indicate that Taiwanese exports of nitrocellulose to Russia have surged by 94% over the past five years. Although Taipei insists that the nitrocellulose exported was not weapons-grade, concerns remain over its potential military applications. In response, Taiwan added nitrocellulose to its controlled export list in mid-2024.
The Broader Implications
These findings have raised concerns among Western allies who expect Taiwan to fully comply with global sanctions against Russia. While Taiwan has taken steps to align itself with Western policies, its growing fossil fuel imports and indirect exports of critical materials suggest a more complex reality.
The Taiwanese government has recently responded to increased scrutiny by tightening its trade regulations. However, many observers remain skeptical about whether private companies will find new ways to continue their trade relationships with Russia.
Conclusion
Taiwan’s trade with Russia presents a paradox. While its exports have significantly declined in line with Western sanctions, its imports of Russian fossil fuels have remained steady, and indirect exports of key materials have continued through intermediaries. The growing reliance on Russian coal and reports of sensitive materials being routed to Russia via third-party countries suggest that Taiwan’s role in global trade is more complicated than it appears.
As Taiwan continues to strengthen its relationships with Western allies, it faces increasing pressure to eliminate all economic ties with Russia. Whether the government will implement stricter measures or whether private companies will continue to find loopholes remains a crucial question for Taiwan’s future trade policies.
This complex issue underscores the challenges Taiwan faces as it navigates geopolitical pressures while maintaining its economic security. The coming years will reveal how Taiwan balances its energy needs, industrial interests, and political alliances in an increasingly polarized world.