Taiwan IEEPA Rate Cut to 15% All-In; 15% Also Applies to Car Parts
Taiwanese auto parts and lumber derivatives subject to Section 232 actions will be subject to a 15% tariff, rather than the 25% rates applicable to most countries, the Commerce Department announced Jan. 15. The reciprocal tariff for Taiwan also will be cut, from 20% to 15%, inclusive of most-favored-nation duties.
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That gives Taiwan the same deal as South Korea, Japan and the EU.
Taiwan's main export to the U.S. is semiconductors; the recent Section 232 action leaves the vast majority of chips untaxed, but said new rates could follow months from now (see 2601140061).
The Commerce Department didn't say what rate Taiwanese chips might face, but said that "Taiwanese companies building new U.S. semiconductor capacity may import up to 2.5 times that planned capacity without paying Section 232 duties during the approved construction period, with a lower preferential Section 232 rate for above-quota imports.
"Taiwanese companies who have completed new chip production projects in the United States will still be able to import 1.5 times their new U.S. production capacity without paying Section 232 duties."
There will be no reciprocal tariff on generic pharmaceuticals, their generic ingredients, aircraft components, and unavailable natural resources.
The fact sheet said Taiwanese semiconductor and technology companies will make investments in the U.S. "totaling at least $250 billion to build and expand advanced semiconductor, energy, and artificial intelligence production."
Commerce Secretary Howard Lutnick, on CNBC, said Taiwanese chipmaker TSMC's already planned fabrication plant in Arizona counts for $100 billion of that number.
The fact sheet said the Taiwan government "will provide credit guarantees of at least $250 billion to facilitate additional investment by Taiwanese enterprises, supporting the establishment and expansion of the full semiconductor supply chain and ecosystem in the United States."
In the TV interview, Lutnick said companies that make power supply, translators and other components that link chips to the machines in which they work will benefit from that support.
"The objective is to bring 40% of Taiwan’s entire production to America … during President Trump’s term," he said. "So we become self-sufficient in the capacity of building semiconductors."
He explained that companies that have expanded capacity in the U.S. will be able to import more chips than the scale of their U.S. production without owing Section 232 tariffs. "If they don’t build in America, the tariff is likely to be 100%," he said.
He said for those who ask why Taiwan would remove so much manufacturing from its own economy and establish the capacity in the U.S., there's a simple answer:
"They need to keep our president happy because our president is the key to protecting their country."