A ruling by the US Supreme Court declaring US President Donald Trump’s global tariffs unconstitutional should boost Taiwan’s stock market when trading resumes tomorrow after the Lunar New Year holiday ends, an analyst said yesterday, while an academic warned that the government and political parties must not misjudge the situation or abandon the negotiated terms in the Agreement on Reciprocal Trade (ART).
In a 6-3 decision issued on Friday, the court ruled that Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose the levies was unlawful.
Fan Chen-hung (范振鴻), president of Capital Investment Management Corp, said the decision should be seen as somewhat positive for the Taiwan Stock Exchange’s post-holiday reopening.
Photo: CNA
Fan said Taiwan’s major exports to the US, such as semiconductors and electronic components, were already exempt from the tariffs and would therefore see little direct impact.
The main beneficiaries, he said, were likely to be the stocks of non-tech manufacturers, including apparel and footwear producers.
Overall, Fan said the court ruling would have only a limited influence on the local stock market, with investor sentiment likely to be more affected by how the market interprets the earnings report of chip giant Nvidia Corp scheduled to be released on Wednesday.
Chiou Jiunn-rong (邱俊榮), an economics professor at National Central University, said the most critical task for the government and parties is to avoid mishandling the situation and observing the reactions of the Japanese and South Korean governments while persuading the legislature to pass the agreed-upon conditions.
Many believe that if the IEEPA becomes invalid, tariffs would return to previous levels and be lower, but the reality is not so simple, he said, adding that the impact of tariffs is not just about the surface number.
The rates applied to Taiwan’s main competitors also play a role, Chiou said. Japan and South Korea have already finalized their tariff rates.
Taiwan’s negotiated tariff agreements are one of the lowest among nations with a trade surplus with the US and it secured most favorable treatment, so the nation is already in a winning position, he said.
Trump has invested significant time and energy into investigating the trade status of various countries and adjusting tariff rates to meet his predetermined goals and to him, these rates are a “done deal,” so even if the IEEPA were to lose effect, he could invoke other mechanisms to raise tariffs back to his target levels, Chiou said.
It is not as simple as: “if the IEEPA fails, tariffs return to square one,” he said.
Separately, at a Hudson Institute seminar yesterday, Hudson Institute senior fellow Riley Walters said that the US Supreme Court ruling would affect Taiwan minimally, as tariffs on Taiwanese exports to the US, namely the 25 percent tariff rate on Taiwanese auto parts, timber, lumber and wood derivative products, were mostly governed under Section 232.
The ART has reduced IEEPA tariffs to 15 percent, while Section 232 tariffs on Taiwanese exports have been reduced to 15 percent, Walters said.
German Marshall Fund of the US’ Indo-Pacific Program managing director Bonnie Glaser yesterday said that the ART highlighted the importance of maintaining Taiwan-US relations.
Glaser said Trump must approve all trade negotiations and the signing of the ART, and his notifying Congress of the intent to sell Taiwan military packages valued at US$11 billion highlights Trump’s willingness to strengthen Taiwan-US relations.
Glaser wrote on social media that “Trump “doesn’t want to look weak, and so he wants to handle [Taiwan] in a way that he doesn’t offend [Chinese President] Xi Jinping (習近平) and undermine the prospects of having a good summit... But he also wants to be seen as tough. And he doesn’t want to be seen as abandoning Taiwan.”
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