Under the current "Mainland China Policy" in Taiwan, direct trade is not allowed. Illegal smuggling activities has increased sharply since martial law has been lifted in 1987. The prices for agricultural products in Mainland China are much lower than those in Taiwan. Smuggling has become much attactive than fishing. A theoretical impacts of smuggling agricultual products from Mainland China on Taiwan agricultural production is analyzed by partial equilibrium model. The economic and welfare impacts are evaluated through the changes of prices, production, consumer's surplus and producer's surplus. In general, if the products smuggled from Mainland China complement domestic production, they will improve the economic welfare on Taiwan. If the smuggled products competet with domestic production, the economic welfare will be improved at the cost of reduction in the producer's surplus. The protection of producer's interests in one of important objectives in the society. To increase domestic production of importable goods, a tariff with no smuggling is superior to a tariff with smuggling. Until the situation is improved, the policy to maintain vigorously combat smuggling should be maintained.