Taiwan has successfully maintained a "relative advantage" in its trade relationship with the United States despite a major legal shift in Washington's tariff policy, Executive Yuan Vice Premier Cheng Li-chun (鄭麗君) announced Tuesday.
The briefing followed a landmark U.S. Supreme Court ruling on February 20, 2026, which invalidated President Donald Trump's use of theInternational Emergency Economic Powers Act (IEEPA) to impose a universal 15% reciprocal tariff. While the ruling created immediate uncertainty in global markets, Cheng emphasized that Taiwan's core trade benefits remain secure through a dual-track negotiation strategy conducted over the last ten months.
According to the Deputy Premier, the Supreme Court decision specifically targeted IEEPA-based tariffs and does not affect Section 232 trade provisions. This distinction is vital for Taipei, as approximately 76% of Taiwan's exports to the U.S. by value fall under existing or potential Section 232 investigations.
Through agreements reached with the U.S. Trade Representative and the Commerce Department, Taiwan has secured preferential rates for automotive components, wood furniture, and aerospace parts. Crucially, the island has also pre-negotiated "most-favored-nation" status for the semiconductor industry. This includes quota-based exemptions and a capped 15% rate for exports exceeding those quotas, providing a safeguard even if future Section 232 measures are announced.
A New Tariff Toolkit
In the wake of the IEEPA setback, the Trump administration has pivoted to Section 122 of the Trade Act of 1974. This framework allows for a 150-day temporary surcharge of 10%, though the administration has already signaled an intent to raise this to 15%. The new measure took effect at 1 p.m. Taiwan time on Monday.
"The direction of U.S. tariff policy remains consistent, even if the legal tools are changing," Cheng noted. She added that U.S. Trade Representative Greer has signaled the possible launch of Section 301 investigations as another alternative pathway for tariff enforcement. Cheng argued that countries like Taiwan, which have already reached formal agreements, are in a stronger position to secure favorable treatment as the U.S. rebuilds its tariff toolkit.
Next Steps for Legislative Review
The Taiwanese government has been in active contact with U.S. officials over the last 48 hours to clarify how the new legal frameworks will apply to existing bilateral arrangements. Once these technical details are confirmed, the Executive Yuan will submit the full suite of documents to parliament for review.
The submission will include theArrangement on Reciprocal Trade (ART), the investment Memorandum of Understanding (MOU), and comprehensive economic impact assessments. Cheng emphasized that these results provide a solid foundation for Taiwan to ensure its industries continue to receive the best possible treatment amid shifting U.S. trade policies.
