Taipei - Taiwan's Vice Premier, Cheng Li-chiun, said on Thursday that Washington has not provided a fixed timetable for applying Section 232 tariffs to semiconductors, and reiterated that preferential treatment for Taiwanese firms was negotiated in advance as part of a January bilateral trade agreement.
Under the trade accord reached in January, the United States agreed to remove or reduce tariffs on a range of Taiwanese imports to 15% for certain items, including automotive and aircraft components, as well as wood and steel products. A notice posted on the U.S. Federal Register described those tariff adjustments, which the notice said are effectively retroactive to May 1 and scheduled for official publication on Thursday U.S. time.
Cheng said the January agreement also secured most-favoured-nation treatment for semiconductors ahead of any future U.S. measures taken under Section 232 - the U.S. national security review covering imports of strategic products such as chips and pharmaceuticals. That advance arrangement means that if and when the United States implements Section 232 semiconductor tariffs, Taiwan will receive corresponding preferential treatment for companies from Taiwan investing in the United States, she added.
Cheng noted that U.S. officials have repeatedly signalled the possibility of Section 232-related tariffs on semiconductors. Even so, she said the preferential arrangements negotiated in January will remain intact and that the United States has not provided a concrete timetable for imposing Section 232 measures on semiconductors.
The point bears relevance given Taiwan's position in the global semiconductor supply chain. Taiwan is a major producer of semiconductors and is home to Taiwan Semiconductor Manufacturing Company, the world's largest contract chipmaker. TSMC is in the process of investing $165 billion to construct manufacturing capacity in the U.S. state of Arizona, a fact noted in the context of the discussion about investment protections under the January deal.
Contextual summary
- The January bilateral trade agreement included tariff reductions to 15% for a set of Taiwanese imports, retroactive to May 1 and set for official publication in U.S. records.
- Taiwan secured pre-emptive preferential treatment under the agreement for any future Section 232 actions on semiconductors, which Cheng said will apply to Taiwanese firms investing in the U.S.
- There is currently no public timetable from the U.S. government for implementing Section 232 semiconductor tariffs, according to Cheng.
Key sectors affected
- Semiconductors and semiconductor manufacturing - given the targeted discussion of Section 232.
- Automotive and aerospace parts, wood and steel imports - due to the tariff adjustments named in the notice.
- Cross-border manufacturing investment flows - especially Taiwan-based investment into the United States.