On the Dash:
- Tariff relief may lower input costs for auto suppliers using Taiwanese precision parts and electronics.
- There is a 15% cap on duties, which provides pricing stability for imported components used in vehicle assembly and production planning.
- Broader supply chain alignment with Taiwan could strengthen automakers’ semiconductor- and EV-related sourcing strategies.
The United States is removing certain metal tariffs on Taiwanese aircraft parts and capping duties on auto parts and wood products, fulfilling part of a January trade agreement with Taiwan.
The U.S. Department of Commerce and the Office of the U.S. Trade Representative published the action on Wednesday in the Federal Register. It covers goods entered on or after May 1.
The change removes Section 232 steel, aluminum, and copper tariffs from civil aircraft components made in Taiwan. It also caps the combined duty rate on Taiwanese auto parts, timber, lumber, and wood products at 15%. Section 232 is a provision of the Trade Expansion Act of 1962 that lets the president impose tariffs on imports deemed a threat to national security.
The action fulfills terms of a memorandum of understanding signed Jan. 15. The American Institute in Taiwan and the Taipei Economic and Cultural Representative Office, which handle unofficial U.S.-Taiwan relations, signed the memorandum. A broader Agreement on Reciprocal Trade followed on Feb. 12, but it is not being implemented at this time.
Under the memorandum of understanding, Taiwan committed to facilitating up to $250 billion in corporate credit lines to back Taiwanese investments in the United States. Those investments target semiconductor supply chains, energy, and artificial intelligence infrastructure. Taiwan is also committed to $250 billion in direct investment in advanced semiconductor, energy, and AI production in the U.S.
The February trade agreement calls on Taiwan to eliminate or reduce 99% of its tariff barriers on U.S. exports. Covered sectors include autos, chemicals, beef, dairy, and pharmaceuticals. The U.S. committed to cap tariffs on Taiwanese goods at 15%.
Two-way trade in goods and services between the two sides topped $185 billion in 2024, according to USTR.
For U.S. automakers and their suppliers, the tariff cap offers modest relief on Taiwanese-made components. Taiwan supplies precision auto parts, electronics, and semiconductors used across vehicle assembly.
