Taiwan’s auto parts manufacturers are to benefit from the US’ preferential tariff treatment for non-semiconductor goods, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday.
Kung’s comments came after the Executive Yuan said in a statement late on Wednesday that the US government is expected to formally announce soon the preferential Section 232 tariff treatment for Taiwan’s non-semiconductor products.
Under the arrangement, tariffs would be capped at no more than 15 percent on imports of auto parts, logs, lumber and wood derivative products, while steel, aluminum and copper derivative products used in aircraft components would be exempted from Section 232 tariffs.
Photo: CNA
The new tariffs would take effect retroactively from May 1, the Executive Yuan said.
The move is also a positive development that could help boost order momentum for auto parts manufacturers, with tariffs dropping from an average 26.71 percent to 15 percent, the ministry said.
Market reaction reflected strong industry expectations, with “almost all related stocks hitting limit-up today,” Kung said.
Taiwan’s auto parts makers have been facing difficult conditions over the past year and during the first four months of this year, with output contracting, he said.
Auto sector production dropped about 2 percent annually during the January-to-April period.
Mexico is the biggest exporter of auto parts to the US, followed by China and Canada, Kung said.
Canada and Mexico benefit from tariff-free treatment, while China mainly competes through low pricing, leaving Taiwanese suppliers at a disadvantage due to higher tariffs, Kung said.
The tariff reduction would put Taiwan on an equal footing with Japan, South Korea and the EU, while further widening its advantages over China, he said.
“China still faces tariffs of more than 50 percent, while ours would be reduced to 15 percent,” he said.
Although Taiwan does not enjoy tariff-free treatment like Canada and Mexico, the competitive gap would narrow significantly, Kung added.
The tariff cut could also support future local auto parts order momentum, Kung said, adding that the ministry would continue monitoring developments over the next one to two months to determine whether additional assistance measures are needed.
Separately, the US Supreme Court in February ruled that reciprocal tariffs imposed by US President Donald Trump under the International Emergency Economic Powers Act were invalid, Kung said.
The ruling prompted the US government to rebuild its legal basis through Section 301 investigations, he said.
Taiwan’s competitive conditions could improve further once the US completes its Section 301 legal restructuring, he said.
It could also serve as another positive development for Taiwanese industries, he said.
While the current temporary tariff structure remains at 10 percent plus most-favored-nation tariff rates, the overall impact remains manageable, but Taiwanese firms still face slight disadvantages compared with some competitors, Kung said.
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