No impact of any future US chip tariffs on Taiwanese exports, says Vice Premier Cheng
Taipei, May 29
,: Taiwan Vice Premier Cheng Li-chiun, on Thursday, said that the semiconductor exports to the US enjoy preferential treatment agreed under an investment memorandum of understanding signed in January, reported Reuters.
The United States has no timetable on the Section 232 tariffs on semiconductors, she added. Under Section 232 of the U.S. Trade Expansion Act, the President has the power to impose tariffs on imports of strategic goods that can threaten national security.
Speaking in Taipei, Cheng clarified that the country got most-favoured-nation treatment for chips with the January deal, even as the US mulls tariffs on semiconductor imports.
"We hope the preferential treatment can be confirmed first. The government will help businesses negotiate their individual tariff-exempt quotas and covered items," Focus Taiwan quoted Cheng as saying.
Taiwan is a semiconductor hub and home to the world's biggest chip contractor, TSMC. The chip giant is investing $165 billion to build factories in the US state of Arizona.
Under the terms of the agreement signed between the two sides in January, Taiwanese companies would be allowed to export up to 2.5 times of their planned production capacity that they are building in the US without paying the Section 232 tariffs, according to the Focus Taiwan report.
Those companies that have already built a chip facility in the US are allowed to import semiconductors equivalent to 1.5 times the new US production capacity without paying the Section 232 tariffs, the report mentioned.
Cheng also announced that the US has waived the Section 232 tariffs on Taiwan's exports of auto parts, timber, lumber and wood derivative products as part of the January pact. These will be retroactively applied from May 1.
Accordingly, the tariffs on auto parts had been cut from 26.71 per cent to 15 per cent. Tariffs on wooden furniture have been slashed to 15 per cent from 25 per cent.
The aircraft components that use steel, aluminium and copper products, all three categories have been fully exempted from Section 232 tariffs. These have been reverted to an average MFN tariff rate of 1.12 percent.
— ANI
Reader Comments
Smart move by Taiwan getting those tariff exemptions retroactively applied from May 1. The 15% on auto parts is still higher than zero but better than 26.71%. I just hope India is watching and learning how to negotiate better trade deals - our electronics exports face way too many barriers.
The preferential treatment for chips is clear - Taiwan is strategically important for US tech. But is India being left behind in this semiconductor race? We have the talent and market but lack the policy certainty. Need to see faster execution on our semiconductor fab projects in Gujarat and elsewhere.
"Most-favoured-nation treatment" - sounds good on paper but these are still tariffs at the end of the day. The auto parts sector getting some relief is welcome, but 15% is no small burden. Glad to see aircraft components fully exempted though - that's a big win for aerospace supply chains.
Vice Premier Cheng's confidence is well-placed. Taiwan's semiconductor industry is the backbone of global electronics. But we must also consider - what about the impact on other countries? India's electronics manufacturing ambitions could benefit if these tariffs make Taiwanese exports slightly more expensive relative to Indian ones.
The 1.5x and 2.5x production capacity exemptions are cleverly designed - they reward companies that actually build in the US. This is exactly the kind of incentive structure India should use for our electronics manufacturing clusters. Good on Taiwan for securing these terms. 👏
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.