U.S. Enacts Section 301 Tariffs with 10% Duty on Certain Taiwan Goods

Taipei: The United States has announced the implementation of Section 301 tariffs targeting imports from 60 economies, including Taiwan, where specific goods will face a 10 percent duty starting on Friday (U.S. time). The measure, unveiled by the Office of the United States Trade Representative (USTR), aims to enforce stricter regulations against the import of goods manufactured with forced labor. According to Focus Taiwan, the USTR's notice specified that if the most-favored-nation (MFN) tariff on a product from Taiwan is below 10 percent, it will be adjusted to meet the 10 percent threshold through a combined MFN and Section 301 tariff. Products already subject to a 10 percent or higher MFN tariff will not incur additional Section 301 duties. This new tariff regime is rooted in a June report recommending tariffs on 60 economies due to their inadequate enforcement of import bans on goods made with forced labor. The USTR investigation, which initiated on March 12, followed the U.S. Supreme Court's decision to strike down global tariffs imposed by President Donald Trump. The investigation involved two rounds of public hearings, over 2,100 public comments, and consultations with U.S. trading partners. The move is seen as an effort by the Trump administration to re-establish tariff pressure on trading partners. Other affected economies include China and India, with tariffs ranging from 10 to 12.5 percent. U.S. Trade Representative Jamieson Greer emphasized the need for trading partners to adopt similar measures against forced labor as the U.S. has enforced for nearly a century. The Taiwan Institute of Economic Research (TIER) commented that the U.S. Section 301 measures are relatively favorable to Taiwan, which faces a 10 percent tariff compared to 12.5 percent for Japan, China, and other economies. TIER President Chang Chien-yi credits Taiwan's efforts in addressing U.S. forced labor concerns for this comparatively favorable treatment. He noted that this could reduce the tariff disadvantage traditionally faced by Taiwanese exporters, particularly in the automobile parts industry. However, TIER economist Liu Pei-chen highlighted potential uncertainties from a separate Section 301 investigation into semiconductor overcapacity, expected to conclude by the end of July. While advanced-node foundries might be less affected, mature-node foundries could face greater challenges due to concerns over excess capacity. Chang noted that Taiwan exports relatively few semiconductors directly to the U.S., with many shipped elsewhere for assembly into ICT products. The impact could be significant if Washington imposes tariffs on finished products containing non-U.S. manufactured chips.