Trump’s global 10% tariffs expire this week; a new “forced labor tariff” is planned—what is Taiwan’s expected tax rate?

The new tariffs could take over from the 10% temporary global tariffs due to expire this week. US Trade Representative Greer said the new measures will be announced as soon as possible in the near term, but he did not specify the exact timeline.
（Background: A US trade court ruled Trump’s 10% global tariffs were unlawful; the Justice Department is preparing to appeal, and market uncertainty continues to intensify）
（Context supplement: Financial Times: Trump will restart the 10% tariffs! Whispers of disagreement erupt inside the White House, fearing a repeat of economic shocks）

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• Two camps: Taiwan is on the side with the lower tariff rates
• Trade tensions are rising, and another front is also underway
• July 24 is a key date

In a July 21 CNBC interview, US Trade Representative Jamieson Greer disclosed that the next round of tariff measures will be announced as early as the near term, but he did not name an exact schedule. In February this year, the US Supreme Court then ruled that multiple tariff measures Trump had relied on were invalid. The White House immediately pivoted, instead citing Section 122 of the Trade Act, as an emergency measure imposing a 10% temporary tariff on a global basis for 150 days.

Now, this temporary measure is set to expire on July 24. The US does not intend to let the tariff rate return to zero; instead, it will shift to using Section 301 of the Trade Act as the basis. The rationale also changes—from simply addressing trade imbalances to targeting “forced labor.” Analysts estimate the new tariff rates will land between 10% and 12.5%. The range is similar to the temporary tariffs, but the legal basis for imposing them is completely different.

Greer said the new measure will cover most of the US’s trade activities, with far broader impact than outsiders may imagine.

Two camps: Taiwan is on the side with the lower tariff rates

Based on the categories currently available, the world’s trading partners are broadly divided into two camps. Taiwan is placed in the lower-tariff group. The same camp also includes Canada, the UK, as well as the EU and Mexico. A shared feature of these economies is that they have already been identified as having taken concrete actions to combat forced labor, so they are expected to face only a 10% tariff rate.

By contrast, Japan, South Korea, and China are in the other camp. Along with India, Brazil, Switzerland, and others, totaling more than 40 major economies, they likely will have to face a higher 12.5% rate. This list nearly covers most of the US’s major trading partners, extending to about 60 economies.

Trade tensions are heating up, and another front is also in motion

Greer acknowledged that these forced-labor-based tariffs are expected to jolt trade nerves again. More importantly, the Trump administration has more than one card: another Section 301 investigation based on “excess capacity” is also underway. The USTR is currently reviewing 16 major trading partners, including Taiwan, China, Japan, South Korea, and the EU.

In other words, even if Taiwan currently holds a favorable position on forced-labor tariffs, it still needs to watch whether this parallel front brings any variables.

July 24 is the key date

As the current 10% temporary tariffs are set to exit on July 24, whether the US will announce the details of the next forced-labor tariffs on schedule will be the most direct indicator to observe in the near term. For export-oriented industries in Taiwan, being in the lower-tariff camp is a relatively positive signal; however, trade tensions and the other investigation are still simmering in the background. Whether the final tariff rate can stay at 10%, and whether additional conditions will be added, will depend on further decisions from the US.