Following the U.S. Supreme Court’s ruling that President Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose reciprocal tariffs was unlawful, the Trump administration moved swiftly to invoke Section 122 of the Trade Act, announcing a 10% temporary global tariff with a signaled increase to 15%, while preserving Sections 232 and 301 as additional instruments. The Court’s decision underscored that the executive branch retains a range of statutory authorities to sustain its tariff framework.
Section 301 Risks Deserve Serious Attention — Traditional Industries Face the Sharpest Pressure
Hsien-Ming Lien, President of the Chung-Hua Institution for Economic Research (CIER), dismissed the notion that Taiwan “negotiated too early” as a case of damned-if-you-do, damned-if-you-don’t thinking. The reciprocal tariffs were always legally contested, and the Trump team had contingency plans in place. With IEEPA constrained, the administration can still raise tariffs through Section 301 (unfair trade practices), Section 232 (national security), or Section 201. Notably, Section 122 allows for a 150-day temporary surcharge without a formal hearing — its purpose being precisely to prevent a return to zero tariffs.
Lien noted that Taiwan’s trade surplus with the United States stands at nearly $160 billion, placing it among the top contributors to the U.S. trade deficit. Initiating a Section 301 investigation would not be a high bar to clear. Delaying an agreement out of dissatisfaction with current tariff rates risks inviting higher tariffs and greater uncertainty, not better terms.
A good deal matters more than negotiating timing. Taiwan-U.S. talks must navigate both U.S.-China dynamics and shifting regional conditions, and delay only multiplies the variables. While most technology sector items have secured exemptions, traditional industries continue to bear the compounded burden of reciprocal tariffs stacked on top of most-favored-nation (MFN) rates. If those rates end up higher than those facing Japan or South Korea, Taiwan’s competitive position becomes considerably more difficult.
Rising Uncertainty — Beware of the Risks from Alternative Legal Authorities
Kristy Hsu, Director of the Taiwan ASEAN Studies Center at CIER, noted that tariff-related provisions account for roughly 30% of any reciprocal tariff agreement’s content. Those specific clauses may be invalidated or require renegotiation in light of the ruling. Market access, non-tariff barriers, investment, procurement, labor, and intellectual property provisions should generally remain in effect, unless specific exceptions apply. However, the enforceability of these provisions will ultimately depend on the exact wording found in each individual agreement.
While the ruling has been widely interpreted as reducing supply chain uncertainty, it does not necessarily reduce future volatility. Should the administration shift to Section 232 or Section 301 as its primary legal vehicle, global trade conditions could face renewed disruption. Inflationary pressures and the approaching midterm elections place a natural ceiling on how far tariffs can realistically be raised, limiting the broader impact on global trade volumes. Whether a drawback mechanism, if activated, would adequately compensate the U.S. consumers and importers ultimately bearing these costs remains an open question. This case illustrates the complex legal foundations and political risks that shape U.S. trade policy, which businesses must navigate with considerable care.
Author: CIER Editorial Team
Date: February 23, 2026