Roy Chun Lee, Senior Deputy Executive Director of the WTO & RTA Center at the Chung-Hua Institution for Economic Research (CIER), noted that while the legal basis for the U.S. reciprocal tariffs has been struck down — following the U.S. Supreme Court’s February 20, 2026 ruling in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs — the broader policy direction remains intact. The U.S.-Taiwan Agreement on Reciprocal Trade (ART), already signed by both sides, continues to serve as an important buffer, with Taiwan positioned to preserve the outcome of a 15% tariff rate that does not stack with most-favored-nation (MFN) treatment.
Legal Basis in Flux, but U.S.-Taiwan Agreement Retains Buffering Effect
Lee observed that the U.S. government has moved in the near term to impose a 10% global tariff under Section 122 of the Trade Act of 1974, stacked on top of MFN rates, while simultaneously launching Section 301 investigations — signaling that Washington is actively rebuilding the architecture of its tariff regime. Using the architectural metaphor of “facadism,” Lee suggested that the administration is inclined to preserve the outward appearance of its existing tariff structure while substituting the legal foundations beneath it, with Section 301 likely to emerge as the primary statutory instrument going forward. In this scenario, the costs of renegotiation would be high enough that Washington is more likely to maintain the current framework, affording Taiwan valuable time to adapt its policy approach and industrial response.
On U.S.-Taiwan trade and economic relations, Lee described the ART as a pragmatic arrangement that, within existing constraints, balances benefits against risks. He noted that Taiwan’s widening trade surplus with the United States largely reflects the ongoing migration of supply chains toward the U.S. market, rather than any outcome attributable to the agreement itself. The agreement’s function, he said, is to remove institutional barriers — not to mandate corporate investment in the United States.
On concerns that investment flows to the U.S. could accelerate industrial hollowing out, Lee argued that Taiwan’s historical investment in China was far larger in scale than what is currently envisioned for the U.S. Yet, it did not erode Taiwan’s overall economic dynamism — suggesting that global expansion can, in fact, enhance competitiveness. Against the backdrop of geopolitical realignment and industrial restructuring, semiconductors and critical technology sectors are bifurcating along strategic lines. Artificial intelligence, advanced computing, new energy, and biotechnology are emerging as the priority areas for deepening Taiwan-U.S. cooperation.
Lee concluded that Taiwan should use the current transitional period to sharpen industrial adjustment and put supporting policy frameworks in place — particularly for the automotive and agricultural sectors — while preserving flexibility in how companies manage their global footprint. He also outlined three pillars on which economic security must rest: maintaining supply-chain competitiveness, safeguarding economic autonomy, and building economic resilience — with the United States playing a central role across all three. Taken as a whole, the U.S.-Taiwan trade agreement represents not only a source of near-term stability but a foundational institutional starting point for deepening bilateral cooperation over the long term.
Author: CIER Editorial Team
Date: April 8, 2026