As sweeping U.S. tariff changes reshape the trade landscape, Taiwanese exporters face mounting uncertainty – and a narrowing window to adapt supply chains and mitigate risks.
On April 2, 2025, the Trump administration invoked the International Emergency Economic Powers Act (IEEPA) to impose sweeping “reciprocal” tariffs on nearly all imports. Taiwan, with over US$115 billion in goods exported to the United States in 2024, now faces complex and evolving trade barriers.
This article summarizes the current tariff regime and outlines strategies that may help exporters mitigate risk. In this quickly evolving area of international trade law, those interested in exporting goods to the United States should seek professional legal advice specific to their circumstances.
All in, unless excluded
Unless a stated exception applies, all products of Taiwan exported to the United States are subject to 10% “reciprocal” tariffs. Taiwan’s reciprocal tariff rate is currently the same as every other country except the People’s Republic of China (PRC), which faces a 145% tariff. Unless a deal is reached or an extension is granted before July 9, Taiwan’s reciprocal tariff will then increase to 32%, likely placing Taiwan among the 30 countries with the highest rates (ranging from 31% to 145%).
Some products may be excluded from the reciprocal tariffs because they are already subject to a different tariff regime under Section 232 of the Trade Expansion Act of 1962 (Section 232). The statute empowers the President to impose measures, including tariffs, to adjust imports in service of U.S. national security. Essentially dormant since 2001, the first Trump administration deployed this mechanism on several occasions. Court challenges in response have largely confirmed broad presidential authority.
Relevant to Taiwan, steel and derivative steel articles are currently subject to 25% tariffs. In 2024, US$4.9 billion worth of Taiwan’s exports to the United States fell within the tariff subheadings now covered by Section 232 steel tariffs. Of that, only a minority (US$624 million) relates to derivative steel articles for which Section 232 duties apply only to the steel content.
The companion Section 232 tariffs on aluminum and derivative aluminum articles also have a significant impact on Taiwan. Although tariff subheadings whose full value is subject to the 25% aluminum tariff accounted for a modest US$313 million worth of Taiwan’s 2024 exports to the United States, an additional US$4.6 billion fell within tariff subheadings for which Section 232 aluminum duty liability is limited to the aluminum content.
In addition, as of May 3, automobile parts are subject to a 25% tariff under Section 232. The tariff applies to components for passenger vehicles and light trucks listed under tariff subheadings that, in total, cover an estimated US$29.7 billion in Taiwan’s 2024 exports to the United States. However, approximately 86% of that figure is attributable to “automatic data processing machines” – in other words, computers – most of which are likely intended for non-automotive uses. Some tariff subheadings are listed on multiple existing Section 232 actions. An April 29 executive order clarified that Section 232 autos tariffs are not intended to “stack” atop Section 232 steel or aluminum tariffs. The Section 232 steel and aluminum tariffs do, however, apply in combination.
Other products may be temporarily excluded from the reciprocal tariffs due to ongoing Section 232 investigations, which could result in future tariffs or other trade remedies. Chief among these are semiconductors, semiconductor manufacturing equipment, and so-called “derivative products.”
While semiconductors themselves accounted for US$11.6 billion – roughly 10% – of Taiwan’s 2024 exports to the United States, the much larger share falls under the broadly defined category of derivative products, which includes a wide range of consumer electronics. These products represented US$61.3 billion, or 53.21% of Taiwan’s total U.S.-bound exports in 2024.
As of this writing, these items remain exempt from reciprocal tariffs. However, statements from the Trump administration indicate that this exemption may be temporary, with Section 232 tariffs – potentially as high as 25% – likely to be extended to these products in the near future.
Additional Section 232 investigations are ongoing, targeting a range of product categories including copper products, wood products, pharmaceuticals and pharmaceutical ingredients, processed critical minerals, medium- and heavy-duty trucks and parts, and the derivatives of each. These investigations may result in further tariffs or trade remedies, adding to the uncertainty for exporters and potentially broadening the scope of goods subject to elevated duties under national security justifications.
The concept of “derivatives” can greatly expand seemingly narrow targets. For example, while Taiwan’s 2024 exports of likely “critical minerals” to the United States totaled just US$125 million, the associated “derivatives” include motors, batteries, radar systems, wind turbines, and advanced optical devices.
Outside of these derivative categories, however, the anticipated coverage of the ongoing or incomplete investigations appears relatively modest for Taiwan. The new trucks investigation will most likely encompass a wide range of vehicle parts, but only for medium- and heavy-duty truck applications. Otherwise, based on estimates reverse engineered from the scope of current reciprocal tariff exclusions, Taiwan’s 2024 exports to the United States totaled US$1.3 billion for pharmaceutical products and inputs; between US$247 million and US$259 million for copper products, depending on the classification of certain chemical compounds; and US$61 million for wood products and printed materials.
Mitigation strategies
Because the reciprocal and Section 232 tariffs are designed to interlock and be essentially comprehensive, there is no one-size-fits-all mitigation strategy. Rather, entities exporting products of Taiwan to the United States should holistically consider their product mix and supply chains to determine what options are feasible and commercially worthwhile. The following examples may warrant consideration:
- Revisit classifications. It may be possible to adjust a product’s composition or export it at an earlier or later stage of production to qualify for classification under a new subheading that has lower ordinary duties and/or the lower rate between the “reciprocal” versus Section 232 tariffs.
- Use the de minimis exception, for now. Products of Taiwan currently remain eligible for the US$800 per recipient, per day de minimis exemption from import duties. This exception is often used by direct-to-consumer retailers. However, the Trump administration has signaled its intent to broadly rescind it. Already, commercially shipped products “of” the PRC and postal mail “from” the PRC are ineligible, effective May 2, 2025.
- Structure the transaction for a “first sale for export.” Some exporters may explore structuring sales to the United States through a middleman based in Taiwan. Under U.S. customs law, if the initial transaction between the producer and the intermediary qualifies as a bona fide “first sale” – meaning the intermediary assumes risk, takes title to the goods, and other key criteria are met – the declared value for customs purposes may be based on that initial transaction rather than the final sale price to the U.S. buyer.
To qualify for this valuation method, exporters must provide clear evidence that, at the time of the first sale, the goods were destined for the United States. Comprehensive documentation must be submitted to U.S. Customs and Border Protection (CBP) to establish eligibility, including contracts, invoices, shipping instructions, and other records demonstrating the structure and intent of the transaction. - Value the product using transfer price. Taiwanese entities may sell to an affiliated U.S. importer. The affiliated transfer price, which may be lower than the price on a direct sale to a final U.S. customer, may be used as the customs value. The transfer price must first satisfy certain tests aimed at demonstrating that affiliation did not affect the price. For example, one might establish that the transfer price covers the producers’ costs plus a profit equivalent to the firm’s overall profit on sales of similar merchandise over a representative period.
- Separate elements of value. In some cases, digital components embedded in a physical product, such as software or media content, may be treated as severable from the good itself and sold or distributed separately. If structured properly, this approach could allow exporters to reduce the dutiable value of the physical item when entering the U.S. market.
However, this strategy is generally ineffective if the purchase of the digital component –such as a software license – is a condition for exporting or using the physical product. In such instances, U.S. CBP is likely to consider the value of the digital element as part of the overall transaction value, and thus subject to duties. - Incorporate U.S. inputs – tariff-specific exclusions. The Section 232 steel and aluminum tariffs and reciprocal tariffs provide varying exceptions for U.S.-origin materials. Generally, steel “melted and poured” and aluminum “smelted and cast” in the United States do not incur Section 232 duties. As for reciprocal tariffs, the U.S. content portion of a good’s value is exempted, so long as that accounts for at least 20% of the total customs value.
- Consider Chapter 98. Certain subheadings of Chapter 98 of the U.S. Harmonized Tariff Schedule can enable merchandise classified thereunder, including certain U.S.-origin components assembled abroad, to partially or fully avoid paying certain duties.
- Make use of partial dutiability. Section 232 steel and aluminum duties cover a variety of “derivative products.” Some “derivative products” are dutiable at 25% of their steel or aluminum content value. A 25% duty on such a product containing only a small amount of steel or aluminum may result in a lower total tariff burden.
- Scrutinize your own supply chain. PRC-specific duties are currently in effect under IEEPA (totaling 145%), Section 301 of the Trade Act of 1974 (ranging from 7.5% to 100%), and U.S. antidumping and countervailing duty law (ranging as high as 1,731%). Taiwanese producers may therefore wish to thoroughly weigh the commercial risk of incorporating significant PRC-made components into U.S.-bound goods. Final or simple assembly is not always enough to impart a “substantial transformation.” A good that is assigned country of origin “PRC” for U.S. customs purposes would generally incur PRC-specific duties, even if final finishing were performed in Taiwan. Conversely, given the desirability of avoiding PRC-specific duties, scrutinizing the potential for circumvention may be warranted.
- Use free trade zones to delay, not eliminate, duties. Goods subject to reciprocal tariffs or Section 232 steel, aluminum, or automobile part tariffs that enter U.S. free trade zones (FTZs) are generally made liable for duties that were applicable at the time the good entered the FTZ, when it enters the United States for consumption. Like a bonded warehouse, this arrangement generally facilitates duty delay, rather than duty relief. Still, that flexibility may be useful. Conversely, if duties were reduced after a product’s entry into a U.S. FTZ, it could result in a disadvantage.
- Consider that re-exports may claim (some) duty drawback: This option is currently available for reciprocal tariffs, but not the existing Section 232 tariffs. It can be used to recover tariffs paid on goods imported to the United States and re-exported or used in manufacturing.
The foregoing list is not exhaustive. Other options may exist depending on each company’s circumstances. When adjusting a company’s approach to entering merchandise, however, one may reasonably anticipate closer scrutiny of duty reductions by U.S. customs authorities. Nevertheless, even if an exporter’s goods have already entered the United States, it may be possible to retroactively apply some of the above strategies, even if not applied during the original entry process, through a post-summary correction or protest. Importantly, the facts prior to entry must generally support the claim.
Planning ahead
Significant shifts in U.S. tariff policy have unfolded rapidly this year, with further changes potentially on the horizon. In response, some exporters may opt to frontload shipments to the United States in an effort to secure greater certainty around duties. At the same time, the Lai Ching-te administration is reportedly pursuing trade negotiations aimed at mitigating the impact of these developments.
While the ultimate direction of the Trump administration’s trade agenda remains uncertain, the “Core Principles” articulated in President Lai’s recent Bloomberg op-ed notably echo the language and priorities put forth by senior U.S. officials. This alignment suggests that a tariff-mitigating agreement may be within reach, offering a potential pathway to de-escalate trade tensions and preserve market stability.
An April 1 multi-agency trade policy memorandum provides some guidance concerning what may be yet to come. Relevant to Taiwan, the report recommends making export controls “simpler, stricter, and more effective.” There have also been mixed signals about whether company-level exemptions from existing tariffs may be introduced.
For companies, staying informed and having a good grasp of import and export practices and data can help facilitate quick adjustments as risks and opportunities arise. With uncertainty growing around reciprocal tariffs and anticipated Section 232 expansions, Taiwan-based exporters must act swiftly to map risks and adapt supply chains.
James E. Ransdell, a partner in Cassidy Levy Kent’s D.C. office, represents clients in trade cases before U.S. agencies and courts, including dumping, subsidies, Section 232, and customs matters.
Disclaimer: The foregoing is provided to TOPICS readers for informational and educational purposes only. The material contained herein is not offered as and does not constitute legal advice or legal opinions and should not be used as a substitute for seeking professional legal advice specific to individual circumstances.
