U.S. Tariffs on Taiwan Trade Announced at 20%, but Tech Industry Awaits Potential Semiconductor Tax from “Section 232” Investigation
On April 1st, the United States announced a 20% tariff on Taiwan, surpassing tariffs on Japan and South Korea. However, the technology industry is waiting for the subsequent report on the “Section 232” investigation, as the potential additional semiconductor tax will be the true determinant of whether they will suffer significant losses.
(Background Summary: The U.S. Imposes a 20% Tariff on Taiwan, Higher than Japan and South Korea! Lai Ching-te Emphasizes It Is Temporary; Analysis of Taiwan’s Stock Market Decline and Negotiation Prospects)
(Contextual Background: The U.S. Reaches into the Offshore Exchange: Taxpayers Must Declare “Overseas Accounts and Cryptocurrencies”)
Waiting for a Report from Washington
At TSMC’s headquarters in Hsinchu and in the boardroom of the “Five Brothers” electronics companies in Neihu Technology Park, everyone is holding their breath, waiting for a report expected from Washington, D.C. The contents of this report could trigger a seismic shift in the global technology supply chain, with Taiwan at its epicenter.
Why is the U.S. initially announcing a 20% tariff on Taiwan, while the tech industry awaits “Section 232”? This provision, commonly referred to as the semiconductor tax, originates from a U.S. trade law that is over sixty years old, known as the Trade Expansion Act of 1962, Section 232. Why has this seemingly outdated law become the most critical industry concern for Taiwan and the most dreaded black swan for the global tech industry?
Section 232: A Trade Weapon for the U.S. President
To understand the power of Section 232, think of it as a long-dormant yet powerful “family heirloom sword” in the U.S. president’s trade arsenal. This sword dates back to the Cold War era and grants the president unique authority: if a particular imported product is deemed a threat to “U.S. national security,” the president can bypass the lengthy legislative process of Congress and the framework of the World Trade Organization (WTO) to unilaterally and swiftly impose trade restrictions, such as tariffs or quotas.
The process to wield this sword is both quick and forceful. Investigations can be initiated at the request of the industry, by government departments, or at the discretion of the Secretary of Commerce. Once initiated, the Department of Commerce must complete the investigation and submit a report to the president within 270 days; the president then has 90 days to decide whether to adopt the recommendations and take action. This “270+90 day” timeline brings enormous uncertainty to the market.
The core power of Section 232