Taiwan–U.S. Trade Deal Signed as U.S.–China Tariff War Enters “Fragile Ceasefire”

As Taiwan and the United States formally signed the Agreement on Reciprocal Trade (ART), attention has turned to the broader trajectory of the U.S.–China tariff dispute ahead of a possible summit this spring between U.S. President Donald Trump and Chinese Leader Xi Jinping(習近平).

Some international media have interpreted recent developments — including the possibility of extending tariff relief — as a sign that China has “won” the trade war. But in an interview with Storm Media, Singapore-based trade scholar Chen Bo (陳波) offered a more cautious assessment, describing the current situation as a “fragile” truce rather than a clear victory for either side.

No Clear Winner

Chen, a senior research fellow at the East Asian Institute of the National University of Singapore, said the present tariff arrangement amounts to a temporary “ceasefire” formed under pressure. （Related： Interview | Why China’s “Run-to-Japan” Wave Is Now Planning a Second Move ｜ Latest ）

He noted that even before the introduction of so-called reciprocal tariffs, China already faced average U.S. tariff rates of around 20 percent. With additional measures — including reciprocal and fentanyl-related tariffs — the effective rate on Chinese goods has risen above 45 percent, significantly higher than the sub-20 percent levels applied to most other countries.

“Under these conditions, it is difficult to say China has won,” Chen said.

At the same time, he added that the United States cannot easily claim victory either. Tariff levels that once exceeded 145 percent were later reduced to around 45 percent. According to Chen, extremely high rates risk halting trade entirely, undermining the policy's purpose.
“If trade stops, tariffs no longer generate revenue,” he said.

Chen also pointed to China's role in rare earth exports, which remain strategically important to the United States, as one factor influencing Washington's willingness to ease tensions.

Tariff Levels Near Historic Highs

Chen compared the current U.S. approach — imposing high tariffs broadly before negotiating bilaterally — to trade practices seen prior to the Great Depression. He said the weakening of the World Trade Organization (WTO) framework has created a situation in which tariff policy increasingly reflects the will of the strongest country.
“Many governments consider this unfair,” Chen said, “but they still choose to negotiate.” （Related： Interview | Why China’s “Run-to-Japan” Wave Is Now Planning a Second Move ｜ Latest ）

He noted that while the United States has concluded clearer agreements with countries such as Japan and South Korea, many arrangements in Southeast Asia remain framework-level understandings without detailed implementation provisions. Disputes over rules of origin standards remain a central issue.

Singapore's Position

Chen said Singapore faces what he described as an “awkward” position under the reciprocal tariff framework. As a zero-tariff economy that runs a trade deficit with the United States, Singapore has limited room to offer additional concessions.

“From the reciprocal tariff perspective, Singapore does not clearly meet the criteria,” he said. However, because the Trump administration has applied a minimum tariff floor of 10 percent, Chen suggested Singapore could ultimately face that baseline rate regardless of whether a formal agreement is signed.

Possible Supreme Court Ruling

Chen also commented on the pending review by the U.S. Supreme Court regarding the constitutionality of certain tariff measures. Even if reciprocal tariffs were found unconstitutional, Chen said the U.S. administration could invoke other trade mechanisms, including Section 301 or Section 201 provisions, to maintain tariff measures.

（Related： Interview | Why China’s “Run-to-Japan” Wave Is Now Planning a Second Move ｜ Latest ）

Who Bears the Cost?

While the Trump administration has argued that foreign countries bear the burden of tariffs, Chen cited research by Gita Gopinath, First Deputy Managing Director of the International Monetary Fund, indicating that during Trump's first term, the economic cost of tariffs on Mexico was largely borne by the American side.

Chen estimated that tariff revenue could amount to roughly US$750 billion, providing significant fiscal resources for the U.S. government. The revenue can be redirected toward domestic subsidies, including support for agricultural sectors.

For Taiwan, meanwhile, the signing of the ART agreement reduces uncertainty for certain sectors — including imported vehicles that had been delayed at Taipei Port. However, the agreement still requires Legislative Yuan approval and continues to generate domestic debate over investment commitments and market access.