Taiwan spent nine months negotiating a trade agreement with the United States that secured lower tariff rates, semiconductor exemptions, and billions in investment commitments. Days after the economy minister declared the deal a success, the U.S. Supreme Court ruled that President Trump had no authority to impose the reciprocal tariffs the agreement was designed to address. Taiwan’s opposition parties are now calling the deal void and demanding renegotiation.

The U.S.-Taiwan Agreement on Reciprocal Trade (ART), reached after nine months of talks, delivered real concessions. Taiwan’s reciprocal tariff rate was set at 15 percent without stacking on top of existing most-favored-nation duties. Semiconductors and semiconductor-derived products received zero-tariff treatment under Section 232 national security provisions. The package also included commitments to two-way investment and a combined $500 billion framework of voluntary corporate spending and government-backed credit for Taiwanese businesses.

Economy Minister Gong Mingxin told reporters on Feb. 24 that the deal improved conditions across virtually every Taiwanese export sector compared to 2025, when a steeper 20 percent reciprocal tariff was in effect. Even industries still under pressure, specifically machine tools (down from 24 percent to 19 percent) and machinery (down from 21.5 percent to 16.5 percent), had narrowed the gap with Japanese and South Korean competitors. Gong characterized the results as excellent.

A Cathay Financial poll released the same day found that nearly half of Taiwanese respondents believed the agreement would boost both the stock market and GDP, and over 40 percent said it would strengthen the semiconductor industry’s global position.

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The United States Supreme Court is seen in Washington, U.S., March 27, 2023. (Image: EVELYN HOCKSTEIN/Reuters)

Then the Supreme Court pulled the legal foundation out from under it

On Feb. 20, the U.S. Supreme Court ruled that Trump had exceeded his authority by imposing reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA). The legal mechanism that had created the tariffs Taiwan spent nine months negotiating to reduce no longer existed.

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Trump responded by invoking Section 122 of the 1974 Trade Act to impose a new 15 percent global tariff on all imports. This is the same rate Taiwan had negotiated down to, but applied to everyone, which means the competitive advantage Taiwan secured through bilateral talks has been diluted. Countries that never negotiated at all now face the same baseline rate.

Gong framed this as still favorable for Taiwan, arguing that the semiconductor exemptions and other ART provisions remain intact and that the overall picture is better than 2025. He said the government would push to finalize the agreement and continue seeking further reductions.

Flags of Taiwan, officialy the Republic of China (ROC), and the U.S. are placed for a meeting in Taipei, Taiwan March 27, 2018. (Image: REUTERS/Tyrone Siu)

Taiwan’s opposition says the deal is effectively void

Taiwan’s opposition parties see it differently. They argue that the ART agreement was built on a tariff framework that no longer has legal standing, and that signing it now would lock Taiwan into commitments, including the $500 billion investment package, in exchange for concessions that the Supreme Court ruling has already made available to every other country for free. They are calling for renegotiation.

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