Source: Supply Chain Dive
Date: 29th May 2026 

Agreement focuses on Section 232 tariffs and strengthens long-term investment ties between the two economies.

The United States and Taiwan have finalised a trade and investment agreement that sets a 15% ceiling on Section 232 tariffs for selected Taiwanese imports, providing greater certainty for manufacturers and supply chains operating across both markets.

Under the agreement, the tariff cap applies to specific automobile parts, timber and wood products, as well as certain aircraft components containing steel, aluminium or copper. The revised tariff treatment is retroactive to 1 May.

The deal builds on a framework agreement reached earlier this year and is narrowly focused on Section 232 measures. It follows the U.S. Supreme Court’s February decision that invalidated certain country-specific tariffs imposed under previous trade actions, prompting the U.S. administration to rely more heavily on alternative trade mechanisms such as Sections 232 and 301.

For automotive products, qualifying passenger vehicle and light truck components imported from Taiwan will face a maximum combined tariff rate of 15%. Where standard tariff rates are below this threshold, a Section 232 surcharge may be applied to bring the total duty rate up to the agreed ceiling.

The agreement also removes additional Section 232 derivative tariffs on a range of non-military aircraft components from Taiwan. These include hydraulic systems, compressors, heat exchangers, transformers and various electrical apparatus used in aircraft manufacturing and assembly.

For timber, lumber and related wood products, the 15% tariff will apply regardless of whether a product would otherwise qualify for lower duties through free trade agreements or preference programmes. Existing anti-dumping and countervailing duties will continue to apply separately where relevant.

Alongside the tariff measures, Taiwan has committed to supporting increased U.S. investment across sectors, including semiconductors, artificial intelligence, defence technology, telecommunications and biotechnology. Taiwanese technology and semiconductor companies are also expected to make significant new investments in advanced manufacturing, energy and AI-related production facilities in the United States.

The agreement reflects ongoing efforts by both economies to deepen industrial cooperation while providing greater predictability for businesses operating within strategic manufacturing sectors.

The agreement provides greater tariff certainty for businesses moving automotive parts, aerospace components and wood products between Taiwan and the United States.

Importers gain clearer visibility into landed costs, while exporters benefit from improved market predictability. The tariff cap may also help businesses make longer-term sourcing and procurement decisions with greater confidence.

The deal supports supply chain stability in several high-value industries, particularly automotive, aerospace and advanced manufacturing.

By establishing a predictable tariff framework, companies can better manage procurement strategies, inventory planning and supplier relationships while reducing exposure to unexpected duty increases.

While the agreement is limited in scope, it signals continued efforts by governments to create greater certainty around strategic supply chains. For businesses involved in manufacturing, technology and industrial production, predictable trade frameworks remain essential for long-term investment, sourcing decisions and supply chain resilience.