USTR Recommends 10% Tariff on Taiwan Under Section 301 Over Forced Labor Imports

The U.S. Trade Representative (USTR), under Section 301 of the Trade Act of 1974, released a report on the issue of banning imports of forced labor products and recommended imposing tariffs on 60 economies. The recommended tariff rate for Taiwan is 10%. The report states that while Taiwan appears to be taking steps to fulfill its commitments regarding the prohibition of forced labor product imports, it currently does not legally ban such products. After the legal basis for the U.S. reciprocal tariff rate expired, the U.S. temporarily imposed a uniform 10% tariff globally under Section 122 of the Trade Act of 1974, layered on top of existing Most-Favored-Nation (MFN) rates, for a maximum of 150 days until the end of July, and is rebuilding the legal foundation through Section 301 investigations. In March, USTR announced a new round of Section 301 investigations targeting 60 economies, including Taiwan, China, Japan, South Korea, and the EU, to determine whether these economies' policies and practices regarding the 'failure to prohibit and effectively enforce bans on imports of forced labor products' are unreasonable or discriminatory and burden or restrict U.S. commerce. USTR released the related investigation report on the 3rd, recommending tariffs on 60 economies. For economies that have already implemented forced labor import bans, have committed to implementing and enforcing such bans through reciprocal trade agreements, or have implemented partial controls to effectively block imports of specific forced labor products, USTR recommended a 10% tariff; for all other economies, a 12.5% tariff was recommended. According to a Federal Register notice, the recommended rate for Taiwan is 10%. In the Section 301 investigation report, USTR wrote that Taiwan appears to be taking steps to fulfill its commitments under the U.S.-Taiwan Reciprocal Trade Agreement regarding the prohibition of forced labor product imports; however, Taiwan currently does not legally prohibit the import of such products. The report indicated that, based on these reasons, the investigation found that Taiwan's practices and policies of failing to implement and effectively enforce a forced labor import ban 'are unreasonable and burden or restrict U.S. commerce.' USTR announced it will hold a public hearing on these recommended measures on July 7. Individuals wishing to attend the hearing must submit an attendance application and testimony summary by June 22. July 6 is the deadline for written comments. Taiwan's Ministry of Economic Affairs stated that all sectors expect the U.S. to complete the Section 301 investigation and announce the final tariff rates before the Section 122 tariffs expire. The Ministry emphasized that it will continue to communicate closely with the U.S. side in coordination with the U.S.-Taiwan negotiation team. Section 301 of the U.S. Trade Act allows the U.S. government to impose tariffs when it determines that there is discrimination against U.S. businesses or actions that contravene U.S. rights under trade agreements.