In April 2025, U.S. President Donald Trump announced the implementation of Reciprocal Tariffs to force nations to the negotiating table. Da-Nien Liu, Director of the Regional Development Study Center at the Chung-Hua Institution for Economic Research (CIER), notes that after a federal court struck down these tariffs in February 2026, the U.S. pivoted by imposing a global 10% tariff under Section 122 tariffs, expected to remain in effect until the end of July. Concurrently, the administration launched investigations under Section 301, claiming it will conduct “precise calibrations” to offset the revenue shortfall resulting from the invalidated reciprocal tariffs.
To address the estimated US$160 billion in unconstitutionally collected reciprocal tariffs, the U.S. activated a refund mechanism known as CAFE. Despite this avenue for reclamation, the whiplash of repeated tariff hikes and subsequent refund processes over the past year has severely disrupted global enterprises. The mounting administrative burden of applying for refunds has left businesses fatigued and overwhelmed. Furthermore, the status of Section 232 tariffs—which primarily target the ICT and electronics sectors—remains largely in the investigative phase with no final rates announced. Combined with the looming threat of subsequent Section 301 actions, Trump’s tariff policy remains clouded in uncertainty.
At first glance, the U.S. refunding reciprocal tariffs while merely imposing a 10% Section 122 tariff appears to yield limited revenue gains. However, by weaponizing tariffs through a “tax first, negotiate later” paradigm, the U.S. leverages these levies to extract multifaceted concessions regarding market access, investment, procurement, and even military sales. Through this “one-for-many” exchange strategy, the U.S. has effectively secured a no-lose scenario.
Following the invalidation of the reciprocal tariffs, existing agreements theoretically warranted reassessment. Yet, the U.S. demanded that nations uphold their original commitments while introducing subsequent adjustments via Section 301 tariffs. Under these circumstances, most countries had little choice but to passively accept the terms and continue negotiations. Taiwan, for its part, has already reached the U.S.-Taiwan Reciprocal Trade Agreement (ART) and Investment Memorandum of Understanding. Although the ART is still pending review by the Legislative Yuan, preparatory countermeasures must be deployed proactively.
Under the agreement, Taiwan is obligated to reduce tariffs to zero immediately upon implementation for over 6,300 product categories, with vehicles—previously subject to tariffs as high as 17.5%—drawing the most scrutiny. In addition to planning industrial support measures, the government is evaluating tariff reductions on auto parts not manufactured domestically to lower overall production costs. Since these tariff cuts would apply globally, they could not only impact tax revenues but also jeopardize the long-term development of the local auto parts industry, requiring careful consideration.
Concurrently, within the bounds of international trade regulations, Taiwan could consider raising the rules of origin thresholds for automotive products to boost the domestic value-added ratio and fortify industrial competitiveness. Secondly, while Taiwan successfully excluded 27 agricultural products (including rice) from U.S. market access, tariffs on other agricultural items must be eliminated or substantially reduced. Taiwan has also committed to refraining from invoking “special safeguard measures” to impose additional tariffs on U.S. agricultural products in the future, underscoring the urgent need for comprehensive contingency plans. Furthermore, while Taiwan has submitted explanations regarding the U.S. Section 301 investigation, excessive optimism is unwarranted. Historical precedent indicates that once an investigation is established, the U.S. typically demands policy adjustments from trade partners. Failure to comply invariably invites retaliatory measures. Consequently, most nations view it more as an instrument of coercion than a simple tariff regulatory mechanism.
In summary, while the U.S. continually recalibrates its tariff rates, its core underlying logic remains unchanged: employing multi-tiered tariff instruments to exert sustained pressure and compel concessions during negotiations. Section 122 tariffs serve to swiftly apply universal pressure; Section 232 tariffs provide the legitimacy of national and industrial security; and Section 301 acts as a targeted check and retaliatory tool. Together, these three mechanisms create a highly flexible and continuous strategic framework.
Source: Da-Nien Liu (April 29, 2026). Navigating the Subsequent Developments of U.S. Tariff Policies. United Daily News https://udn.com/news/story/7340/9470376