Taiwan-U.S. Memorandum of Understanding Implemented　Delivering Tariff Relief for Three Key Industries

Following approximately two months of bilateral consultations and coordination, U.S. authorities have announced plans to publish a Federal Register notice to implement the Taiwan-U.S. Memorandum of Understanding (MOU). The measures, effective retroactively from May 1, provide Section 232 tariff relief for several categories of Taiwanese exports, including automotive components, wood products, and aerospace-related goods, strengthening Taiwan's competitiveness in the U.S. market.

Under the new framework, Taiwanese automotive components will be subject to a 15% Section 232 tariff rate without the addition of Most-Favored-Nation (MFN) duties, aligning Taiwan's treatment with that of Japan, the European Union, and other key trading partners. The effective tariff burden on Taiwanese automotive parts exported to the United States is expected to decline from an average of approximately 26.71% to 15%.

For wood and furniture products, softwood products will retain the existing 10% tariff rate, while wooden furniture products will see their Section 232 tariff rate reduced from 25% to 15%. The revised tariff structure is expected to enhance the competitiveness of Taiwanese exports relative to products from major competing suppliers such as China and Vietnam, while maintaining parity with exporters from Japan, South Korea, and the European Union.

In the aerospace sector, aircraft components will be exempted from Section 232 tariffs. Previously, certain steel-, aluminum-, and copper-intensive aerospace components faced Section 232 duties of up to 50%, while derivative products were subject to 25% tariffs. Machinery, equipment, and infrastructure-related aerospace components carried combined tariff rates of approximately 15%. Following the exemption, these products will be subject only to MFN duties, with an average tariff rate of approximately 1.12%.

The implementation of these measures marks a significant advancement in Taiwan-U.S. economic and trade cooperation. The tariff relief is expected to strengthen bilateral supply chain integration, reduce export costs for Taiwanese manufacturers, and enhance the competitiveness of Taiwan's industrial sectors in the U.S. market.

Source: MOEA