Taiwan Moves to Protect Exports from New US Tariffs
Taiwanese officials are moving to protect the country's key export sectors, particularly semiconductors, from new US trade barriers. As the US shifts its tariff authority, Taiwan is seeking guarantees that its critical industries will be shielded from the new policies. The situation highlights the global ripple effects of US trade policy on complex international supply chains.
- The new tariff authority stems from the President invoking Section 122 of the Trade Act of 1974 after a February 20, 2026, Supreme Court ruling invalidated the use of the International Emergency Economic Powers Act (IEEPA) for imposing "reciprocal" tariffs. This resulted in a new 15% ad valorem import duty on practically all merchandise, effective for 150 days starting February 24, 2026. - Just before the court's ruling, the U.S. and Taiwan signed an "Agreement on Reciprocal Trade" on February 12, 2026. This deal included a commitment for $250 billion in direct investment by Taiwanese semiconductor and technology firms to build and expand advanced production capacity in the United States. - Under the terms of that bilateral agreement, Taiwan had secured a 15% tariff rate and special status for its semiconductors under Section 232 of the Trade Expansion Act, which covers national security. While the Supreme Court's ruling voided the authority for the original "reciprocal" tariff, the provisions related to Section 232 are expected to remain unaffected. - Taiwan's exports to the U.S. surged 78% in 2025 to $198.2 billion, making the United States its top export destination. In the previous year, over 81% of the roughly $200 billion in goods exported to the U.S. were information and communications technology products, including chips. - The policy shift highlights a broader trend of geoeconomic fragmentation, ranked as a top global risk for 2026. For manufacturers, this trend is leading to more complex "hybrid" supply chains, where localized production still depends on globally sourced components, increasing risks related to total landed costs and regional logistics volatility. - The administration's stated goal is to use a combination of tariffs and trade deals to promote the "reshoring" of domestic production. The investment agreement with Taiwan is central to this, aimed at revitalizing American semiconductor manufacturing after the U.S. share of global wafer fabrication fell from 37% in 1990 to under 10% in 2024.
