Taiwan must act to preempt potential Section 301 investigations as US President Donald Trump moves to a new tariff strategy, following a US Supreme Court ruling that voided tariff measures, an academic said yesterday.
Countries running the largest trade surpluses with the US face a growing likelihood of Section 301 investigations, Chung-Hua Institution for Economic Research president Lien Hsien-ming (連賢明) said.
Section 301 refers to a provision of the Trade Act of 1974 that allows Washington to impose retaliatory tariffs over perceived unfair trade practices, including the running of large trade surpluses.
Photo: Hsu Tzu-ling, Taipei Times
Because Taiwan has become the fourth-largest source of the US’ trade deficit, totaling about US$160 billion, it would not be that difficult for Washington to build a case for a Section 301 probe, Lien wrote on social media on Sunday.
“Taiwan must brace for the next round of Section 301 investigations,” Lien said, urging the government to prepare a response strategy without suggesting what it might be.
The issue for Taiwan is that its trade surplus with the US has ballooned in the past two years due to massive demand for chips and servers for use in data centers or artificial intelligence products, items that it specializes in.
Trump invoked Section 122 of the Trade Act of 1974 to impose a 15 percent global surcharge, up from 10 percent announced earlier, after the US Supreme Court on Friday struck down tariffs he had imposed on trading partners, including Taiwan, under the
International Emergency Economic Powers Act (IEEPA).
The Trump administration vowed to leverage additional trade tools, including Section 301 investigations, to circumvent the ruling and press ahead with his tariff agenda.
Lien observed that Section 122 does not permit country-specific tariff rates and therefore would not necessarily reduce the trade deficit, but it allows the administration to quickly restore tariff coverage for up to 150 days without congressional approval.
Lien expected the Trump administration would increasingly rely on Section 232 of the Trade Expansion Act of 1962 — a national security-based measure — alongside Section 301 to restore differentiated tariff rates.
For the moment, all articles and parts of articles that currently are or later become subject to section 232 actions are exempt from the Section 122 temporary import duty, according to a statement issued on Friday by the White House.
Taipei and Washington signed the Taiwan-US Agreement on Reciprocal Trade on Feb. 12, cutting tariffs to 15 percent from the 20 percent under the IEEPA, while Taiwanese semiconductors were granted most-favored treatment under Section 232.
However, the agreement has yet to be reviewed and ratified by the Legislative Yuan.
On Saturday, the Chinese Nationalist Party (KMT) urged the government to renegotiate the deal, and clarify whether the agreement is still valid.
The KMT’s Johnny Chiang (江啟臣), deputy legislative speaker, yesterday warned that Trump would utilize every measure possible to address trade deficits, and he called on the government to manage the situation and help industries prepare for potential fallout.
Former Taiwan People’s Party legislator Chang Chi-kai (張?楷) said that since the trade issue is still evolving, Taiwan should “wait and see.”
Chang suggested that the Legislative Yuan delay reviewing the agreement until the US policy direction becomes fully clear.
The Legislative Yuan had arranged a session for the Cho and Cabinet members to report on the trade agreement and its impacts on Taiwan next month.
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