Haikui had initially appeared to depart the island but made a second landfall early Monday in southwest Kaohsiung before moving out into the Taiwan Strait.
There were no reports of deaths. More than 100 people suffered injuries during the typhoon, according to authorities, though they were minor -- mostly due to fallen trees and car accidents.
Destruction was seen in coastal Taitung, a mountainous county in lesser-populated eastern Taiwan where the storm directly hit the day before.
"This is the first time I have seen such a big typhoon in my life," said Chen Hai-feng, 55, a village chief in Taitung's Donghe township.
Although Haikui is considered less severe than previous storms, Chen told AFP it felt more powerful as he surveyed an early-morning work crew removing trees from a road.
"It came like an arrow straight at us," he said.
Workers carefully manoeuvred diggers to move downed tree branches and snapped power cables from the road.
Further north in Changbin township, workers ferried massive concrete blocks to a coastal highway that had partially collapsed because of powerful waves, hoping they would absorb the impact.
Heavy orange-coloured barriers were placed near the edge to prevent cars from skidding on slippery roads.
Kirin Chen pitched in to help a work crew clear branches from a pathway leading to a school in Taitung county.
"So many trees have fallen," she said. "We are trying to remove the trees on the sidewalk so that the children can safely come to school tomorrow."
And in Keelung -- a northern port city surrounded by mountains -- vendors at a market braved the rain to sell fruit to raincoat-clad shoppers.
- Thousands without power -
Haikui -- the first typhoon landfall in Taiwan in four years -- forced the evacuation of nearly 8,000 people across the island, particularly from landslide-prone mountainous regions.
Hundreds of flights were cancelled and businesses were closed.
More than 260,000 households temporarily lost power and around 22,000 homes still had no electricity by Monday afternoon, while schools and businesses remained closed in 14 cities as torrential rain bucketed down.
A forecaster with Taiwan's Central Weather Bureau said Haikui initially appeared to track away from the island and out to sea but made a second landfall in Kaohsiung at around 4:00 am (2000 GMT Sunday).
During the night "the centre of the typhoon was almost circling" the port city, but as it moved along the coastline "the structure of the typhoon is damaged by the terrain and gradually weakens", she said.
By mid-day, the storm had moved southwest of Taiwan's outlying island of Penghu.
Kaohsiung's local government reported hundreds of toppled trees and flooding in dozens of locations, although the situation was easing as the storm departed and the weather conditions improved.
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