Taiwan’s Executive Yuan has announced the official rollout of U.S. Section 232 tariff concessions for the island’s non-semiconductor products. The measure, which lowers tariffs on goods including auto parts to 15%, applies retroactively to May 1. According to Chih-Yen Tai, an associate research fellow at the International Economic (Second) Research Division of the Chung-Hua Institution for Economic Research (CIER), the move will not only narrow the tariff gap between Taiwan and key competitors like Japan and South Korea but also empower Taiwanese firms to expand their U.S. presence. Tai noted that manufacturers are now well-positioned to capture market share left vacant by Chinese companies retreating under the pressure of steep tariffs.
Auto Parts Tariffs Drop to 15%, Leveling the Playing Field
Tai said that with the reduction, tariffs on Taiwanese auto parts are now roughly on par with those from major exporters such as the European Union, Japan, and South Korea. However, Taiwan targets a significantly different segment of the U.S. market than its East Asian peers. While Japanese and South Korean firms primarily supply original equipment manufacturer (OEM) assembly lines, Taiwan has long specialized in the aftermarket (AM) sector, supplying components such as lighting, bumpers, sheet metal, and interior parts.
The U.S. aftermarket demands stringent quality and certification standards, an area where Taiwanese firms have built a robust track record over many years. Many of their products carry Certified Automotive Parts Association (CAPA) credentials, which are highly recognized by the U.S. insurance industry. Because these aftermarket parts are already integrated into some insurance coverage networks, Taiwanese manufacturers managed to maintain steady shipment volumes even when facing previously higher tariffs.
Policy Tailwinds to Boost Traditional Industries and Job Growth
Tai added that the true significance of this tariff cut is that it widens the competitive moat between Taiwan and its rivals in China and parts of Southeast Asia. With comparable Chinese products still facing U.S. tariffs exceeding 50%, Taiwanese companies that seize the opportunity presented by supply chain shifts and diverted orders can significantly increase their U.S. aftermarket footprint.
Ultimately, the tariff relief offers a welcome stimulus for traditional manufacturing sectors. Beyond securing international orders, the policy is poised to drive capacity expansion and domestic job creation, injecting stable growth momentum into Taiwan’s broader economy.
Author: CIER Editorial Team Date: May 29, 2026