Following the US Supreme Court’s ruling that US President Donald Trump’s “reciprocal” tariffs are unlawful, and with the Taiwan-US Agreement on Reciprocal Trade (ART) soon to be submitted to the Legislative Yuan for deliberation, the question of whether the ruling would render ART void or require a restart of negotiations looms. Even if the original tariffs are struck down, they would be replaced by a 15 percent across-the-board global tariff levied under Section 122 of the Trade Act. Six months after the initial implementation of the US’ reciprocal tariff policy, uncertainty remains.
While the Section 122 measure would be unilateral and transitional, ART, by contrast, is a stable, institutional arrangement achieved through bilateral negotiations. Notably, the deal has secured tariff exemptions for 2,072 categories of products exported to the US, covering 76 percent of agricultural and industrial goods, which accounts for 42 percent of total agricultural export value and 36 percent of industrial product export value. This brings the average effective tariff on Taiwan’s exports to the US down to 12.33 percent. Being legally based on the provisions of Section 232 of the US Trade Expansion Act, it is therefore unaffected by the Supreme Court’s ruling.
Looking more closely, 72 agricultural product categories have been granted “safeguard exemptions,” shielding them from additional tariffs imposed under Section 122, while 27 agricultural categories enjoy “exclusive exemptions” of being uniquely exempt from tariff adjustments of any kind. Comparatively, the tariff provisions of ART are more favorable than the previous reciprocal tariff arrangement and the current 15 percent global tariff rate. It therefore serves to safeguard Taiwan, relative competitive advantage and most favorable treatment. The negotiating team’s achievement in successfully sidestepping the legal controversy surrounding the basis of reciprocal tariffs, and ensuring that ART was built on lasting foundations should not go unappreciated.
As for US agricultural imports, Taiwan has firmly held the line on maintaining the status quo for 27 important agricultural products, including rice, while selectively reducing tariffs or opening imports on certain products with low self-sufficiency rates or strong market demand. Taiwan has insisted on upholding international food safety standards and scientific evidence as the basis for regulation — and this represents the best possible negotiated outcome given the long-standing pressure the US has exerted on Taiwan. Without ART, Taiwan would likely continue facing persistent demands to open markets for rice, pork, beef and other products. At the very least, the 27 important agricultural categories would face no further pressure to liberalize in the near term.
These negotiated outcomes were hard-won. Had it not been for the window of opportunity created by Trump’s tariff storm, it is unlikely Taipei would have concluded a Taiwan-US trade agreement within 10 months. The mutual commitment of each side to honor the negotiated results is now a vital foundation for consolidating the bilateral relationship and advancing future cooperation. Moreover, ART can serve as a model for expanding trade agreement negotiations with other countries.
For these reasons, Taiwan should seize this rare and opportune moment, and the Legislative Yuan should pass the bill as swiftly as possible. Thereafter, the legislature must enhance its oversight of the agreement’s implementation and downstream effects, to preserve Taiwan’s competitive edge and its most favorable treatment.
Yang Ming-hsien is a professor in the Department of International Business at Feng Chia University.
Translated by Gilda Knox Streader
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