Tue, Mar 17, 2026 page8

• EDITORIAL: Stay calm, brace for trade probes

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  The Office of the US Trade Representative (USTR) on Wednesday last week announced it is launching investigations into 16 US trading partners, including Taiwan, under Section 301 of the Trade Act of 1974 to determine whether they have engaged in unfair trade practices, such as overproduction. A day later, the agency announced a separate Section 301 investigation into 60 economies based on the implementation of measures to prohibit the importation of goods produced with forced labor. Several of Taiwan’s main trading rivals — including China, Japan, South Korea and the EU — also made the US’ investigation list.

  The announcements come as US President Donald Trump’s administration rushes to implement new tariffs after the US Supreme Court on Feb. 20 ruled that the White House’s country-specific “reciprocal” tariffs imposed last year under an emergency law were illegal. Trump immediately imposed a temporary 150-day flat 10 percent tariff, stacking on existing most-favored nation rates, on all imports under Section 122 of the Trade Act. The purpose of the Section 301 probes is likely to establish a legal basis for replacing or extending the earlier tariffs before the Section 122 levies expire in July.

  The White House’s other policy options are invoking national security concerns under Section 232 of the Trade Expansion Act of 1962, or addressing trade imbalances and unfair trade practices under Sections 122 and 201 of the Trade Act. However, the Section 301 investigations are, for the moment, the US’ primary trade weapon, allowing it to unilaterally target what it perceives as unfair trade practices using high tariffs without rate limits and setting import quotas, all without having to go through WTO dispute settlement procedures. Although the Section 301 process is more complicated and time-consuming, once implemented, the tariffs could become permanent and harder to reverse.

  During his first term, Trump invoked Section 301 to impose tariffs on a wide range of Chinese goods. China remains Washington’s core target. The USTR said that Chinese companies in steel, batteries, petrochemicals, machinery, automobiles and electronics have expanded capacity and exceeded market demand. The overproduction is not simply a matter of competitiveness. Rather, it is a result of government subsidies, state-led investment, insufficient domestic demand and inefficient production capacity, the agency said.

  For Taiwan, the Section 301 investigations would differ significantly from China’s. It is not allegations of structural overcapacity, discriminatory industrial policies or unfair trade practices that put Taiwan in the White House’s crosshairs, but rather the country’s long-standing trade surplus with the US. Its trade surplus with the US almost doubled to US$150 billion last year from the previous year, driven by robust exports of semiconductors, electronics, and information and communications technology products.

  The US has not singled out Taiwan over forced labor concerns. The risk to Taiwan is relatively low on that front, as Taipei has pledged to prevent forced labor and prohibit products made with forced labor under the Taiwan-US Agreement on Reciprocal Trade reached last month. In that respect, Taiwan’s inclusion on the Section 301 investigations list is more of a trade negotiation tactic than a perceived threat to US workers and businesses.

  The Trump administration aims to wield Section 301 as a tool to impose retaliatory tariffs or pressure countries into negotiations by targeting trading partners’ tax systems, industrial policies and trade practices that the White House views as unfavorable to US companies. While the Section 301 investigations cover many issues, matters directly relevant to Taiwan are primarily its trade surplus and accusations of currency manipulation.

  While the government has said that the investigations would not undermine the Taiwan-US Agreement on Reciprocal Trade, the possibility of them being conducted to pressure Taiwan to accelerate the agreement and give the US more market access cannot be ruled out. For Taiwan, overestimating the investigations breeds panic; underestimating them breeds complacency. The best strategy is to stay clear-eyed, maintain sound exchanges with the US and prepare.
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