Following the release of a Section 301 forced labor investigation report by the Office of the U.S. Trade Representative (USTR), Taiwan was placed on the watchlist and faces a 10% tariff hike. Da-Nien Liu, Director of the Regional Development Study Center at the Chung-Hua Institution for Economic Research (CIER), noted that the U.S. has launched Section 301 investigations into forced labor across 60 economies. Taiwan is among 14 countries recommended for the lowest tariff rate of 10%, which is relatively mild. However, the subsequent Section 301 probe targeting the trade surpluses of 16 countries, including Taiwan, is the true threat—the “final brunt” of tariffs. Director Liu advised the government to formulate a compelling narrative to persuade Washington to mitigate the tariff impact on Taiwan.
After the U.S. Supreme Court struck down President Trump’s reciprocal tariffs as unconstitutional in February, Trump swiftly invoked Section 122 of the Trade Act of 1974 to impose a 10% global tariff. Director Liu observed that Section 122 is only valid for 150 days, expiring on July 24. Extending it requires congressional approval. Facing opposition from some Republicans, Trump pivoted to Section 301 as a new mechanism to wield the tariff axe globally.
Section 301 Probe Locks In on Trade Surplus Nations; Taiwan Should Emphasize Exports Meet U.S. Industrial Demand
Trump’s latest Section 301 action has two primary focal points. Beyond initiating forced labor investigations into 60 economies, it also targets 16 key trading partners—including South Korea, China, Taiwan, and Japan—for unfair trade practices. Put simply, the measure hones in on countries maintaining substantial trade surpluses with the U.S. Given that Taiwan’s trade surplus with the U.S. has continued to widen since reaching US$64.9 billion in 2024, navigating this investigation will be of paramount importance.
Director Liu analyzed that the crux of the Section 301 probe is to penalize the “dumping of excess capacity into the U.S.” However, major U.S. imports from Taiwan consist largely of semiconductors and servers—products for which U.S. demand is exceptionally robust, rather than dumped excess capacity. He strongly recommended that the government leverage this “robust U.S. demand” argument to negotiate greater tariff concessions for Taiwan.
Leveraging the U.S.-Taiwan Agreement to Mitigate Impact
Regarding forced labor, Chapter 3 of the U.S.-Taiwan Agreement on Reciprocal Trade (ART) explicitly prohibits such practices. Director Liu noted that the government could pursue lower tax rates by highlighting its commitment to faithfully fulfilling its obligations following the signing of the agreement.
Trump’s reciprocal tariff policy has been in place for 14 months since last April, yet the implementation remains chaotic. The administration has yet to process requests from hundreds of companies seeking tariff refunds. The National Development Council (NDC) has also cautioned that the U.S. tariff policy remains a significant variable, and its impact on the domestic economy requires close and continuous monitoring.
Source: Da-Nien Liu (June 4, 2026). Section 301 Probes Trade Surpluses; the Tariff Axe Has Yet to Swing. China Times. https://www.chinatimes.com/newspapers/20260604000506-260121