U.S.–Taiwan agreement revises reciprocal tariffs so most Taiwan-origin imports face a minimum 15% U.S. duty, with limited zero-duty exceptions.

REGULATORY BRIEFING – U.S.–TAIWAN RECIPROCAL TRADE AGREEMENT

1. What changed

The Agreement on Reciprocal Trade between the United States and Taiwan establishes a new reciprocal tariff framework affecting U.S. imports of Taiwan-origin goods:

• The United States (through AIT/USTR) revises how it applies additional "reciprocal" tariffs on Taiwan-origin imports under:
• Executive Order 14257 of April 2, 2025 (Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits), as amended.
• Executive Order 14360 of November 14, 2025 (Modifying the Scope of the Reciprocal Tariffs With Respect to Certain Agricultural Products).
• Schedule 2 of Annex 1 sets:
• A list of Taiwan-origin goods (Schedule 2A) that are exempt from the additional ad valorem reciprocal duty under EO 14257.
• A list of Taiwan-origin goods (Schedule 2B) that receive a reciprocal tariff rate of zero under EO 14360.
• A default rule for all other Taiwan-origin goods: the total U.S. duty on these goods is at least 15% ad valorem if their MFN rate is below 15%.

This is a binding change to how U.S. customs duties are calculated on Taiwan-origin imports and directly affects HTS classification, duty calculation, and landed cost for importers.

2. Affected products

2.1 Scope by origin

• Affected: All "originating goods of the territory represented by TECRO" (i.e., Taiwan-origin goods that qualify as originating under the agreement’s rules of origin once adopted under Article 7.1).
• Non-affected: Goods from other countries; non-originating goods transshipped via Taiwan that do not meet origin criteria.

2.2 Product coverage and HTS

• Schedule 2 is expressed in terms of the Harmonized Tariff Schedule of the United States (HTSUS). Interpretation follows HTSUS General Notes, Section Notes, and Chapter Notes.
• Specific HTS lines for:
• Schedule 2A (Taiwan-origin goods exempt from additional reciprocal duty under EO 14257).
• Schedule 2B (Taiwan-origin goods with a reciprocal tariff rate of zero under EO 14360, focused on certain agricultural products).

The PDF provided does not reproduce the detailed HTS line lists for Schedules 2A and 2B; importers must consult the full Schedule 2 tables as published by USTR/HTSUS for exact HTS coverage.

3. Rate changes and duty calculation

3.1 Key legal references

• Executive Order 14257 (April 2, 2025): establishes additional ad valorem reciprocal tariffs based on MFN rates.
• Executive Order 14360 (November 14, 2025): modifies scope of reciprocal tariffs for certain agricultural products, including zero reciprocal rates for some.
• Agreement Annex 1, Schedule 2 (Tariff Schedule of the Territory Represented by AIT).

3.2 New U.S. duty treatment for Taiwan-origin goods

Schedule 2 General Notes set the following rules:

(1) Goods in Schedule 2A – no additional reciprocal duty

• Text: "AIT, through its Designated Representative, shall not apply the additional ad valorem rate of duty applicable to those goods as provided for in Executive Order 14257..."
• Effect:
• For Taiwan-origin goods listed in Schedule 2A, only the MFN rate under HTSUS column 1 (General) applies.
• The additional reciprocal duty under EO 14257 is NOT applied.

(2) Goods in Schedule 2B – zero reciprocal tariff rate

• Text: "AIT... shall provide a reciprocal tariff rate of zero, in accordance with Executive Order 14360..."
• Effect:
• For Taiwan-origin goods listed in Schedule 2B, the reciprocal tariff rate is 0%.
• General Note 4 clarifies: "AIT... shall continue to apply the MFN rate of duty... for products described in paragraphs 2 and 3."
• Practically: MFN duty still applies; the reciprocal component is zero. There is no extra reciprocal surcharge on these lines.

(3) All other Taiwan-origin goods – minimum 15% total duty if MFN < 15%

• Text (General Note 5):
• "For all other originating goods of the territory represented by TECRO, the additional ad valorem rate of duty provided for in Executive Order 14257... is determined by the good’s MFN rate of duty... under column 1 (General) of the HTSUS.
• For an originating good... with an MFN rate of duty that is less than 15 percent, the sum of the MFN rate of duty and the additional ad valorem rate of duty... shall be 15 percent.
• For an originating good... with an MFN rate of duty that is at least 15 percent, the additional ad valorem rate of duty... shall be zero."

• Practical duty calculation:
• Case A – MFN < 15%:
• Total U.S. duty rate on Taiwan-origin good = 15% ad valorem.
• Additional reciprocal duty = 15% – MFN rate.
• Example: MFN = 5% → additional reciprocal duty = 10% → total = 15%.
• Case B – MFN ≥ 15%:
• Additional reciprocal duty = 0%.
• Total U.S. duty rate = MFN rate only.

3.3 Summary of rate impacts

• Many Taiwan-origin products that previously entered at low MFN rates (e.g., 0–10%) will now face a total 15% duty unless specifically listed in Schedule 2A or 2B.
• Products already at or above 15% MFN see no incremental reciprocal duty but remain subject to their existing MFN rate.
• Certain agricultural and other specified products in Schedules 2A and 2B are shielded from the additional reciprocal duty and/or receive a zero reciprocal rate.

4. Effective dates and duration

• Entry into force (Article 7.5):
• The Agreement enters into force "the day following the date of the last notification" that each Party has completed internal procedures.
• The text does not specify the exact calendar date; importers must confirm via USTR’s implementation notice and HTSUS updates.
• Once in force:
• The Schedule 2 rules for Taiwan-origin goods apply immediately to entries on or after the effective date.
• Termination (Article 7.6):
• Either Party may terminate with 6 months’ written notice; until then, the reciprocal tariff structure remains in effect.
• Conditional termination triggers (Articles 4.3 and 5.4(6)):
• If Taiwan concludes certain digital trade or free trade agreements with "covered nations" (10 U.S.C. § 4872), AIT may terminate this Agreement and "reimpose the applicable reciprocal tariff rate" (i.e., revert to prior EO 14257 treatment without the Taiwan-specific carve-outs).

5. Required actions for importers, brokers, and compliance teams

5.1 Origin determination and documentation

• Confirm Taiwan origin:
• Ensure robust origin determination for goods potentially qualifying as "originating goods of the territory represented by TECRO" under the Agreement’s rules of origin (to be set/clarified under Article 7.1).
• Maintain supplier declarations, bills of materials, and production records to substantiate Taiwan origin.
• Watch for rules of origin updates:
• Article 7.1 allows the U.S. to establish rules of origin if benefits accrue substantially to non-party jurisdictions; monitor for any origin tightening that could exclude certain Taiwan-based production.

5.2 HTS classification and schedule mapping

• Verify HTSUS classification:
• Confirm correct 10-digit HTSUS classification for all Taiwan-origin products.
• Map to Schedule 2:
• Determine whether each HTS line is:
• Listed in Schedule 2A (no additional reciprocal duty),
• Listed in Schedule 2B (zero reciprocal rate), or
• Not listed (default 15% rule applies if MFN < 15%).
• Update internal tariff tables:
• Configure systems so that for Taiwan-origin goods:
• If HTS in 2A: duty = MFN only.
• If HTS in 2B: duty = MFN only (reciprocal component = 0).
• If HTS not in 2A/2B and MFN < 15%: duty = 15% total.
• If HTS not in 2A/2B and MFN ≥ 15%: duty = MFN only.

5.3 Entry filing and ACE/ABI configuration

• Country of origin field:
• Ensure Taiwan is correctly reported as the country of origin where applicable; misreporting could either overpay or underpay duties.
• Special program indicators:
• Monitor CBP guidance for any special indicators or Chapter 99 provisions that may be used to implement the reciprocal tariffs for Taiwan-origin goods.
• Broker instructions:
• Issue written instructions to customs brokers outlining the new duty logic for Taiwan-origin goods and requiring confirmation that entries reflect the correct total duty rate.

5.4 Costing, contracts, and supply chain planning

• Recalculate landed cost:
• For all Taiwan-origin SKUs with MFN < 15%, recalculate landed cost assuming a 15% total duty unless covered by Schedules 2A/2B.
• Contract adjustments:
• Review purchase contracts and Incoterms to determine who bears the increased duty cost.
• Consider renegotiating pricing or sourcing terms where the 15% floor materially impacts margins.
• Sourcing strategy:
• Evaluate alternative sourcing from countries not subject to the reciprocal 15% minimum where feasible.
• For products benefiting from zero reciprocal rates (Schedule 2B), consider whether Taiwan sourcing becomes more competitive relative to other origins.

5.5 Monitoring and compliance risk

• Monitor USTR/CBP publications:
• Watch for:
• Federal Register notices implementing the Agreement and updating HTSUS annotations.
• CBP CSMS messages on programming changes and filing instructions.
• Audit and post-entry review:
• Conduct periodic audits of Taiwan-origin entries to ensure:
• Correct origin determination.
• Correct HTS classification.
• Correct application of the 15% minimum or zero reciprocal rate where applicable.
• Use Post Summary Corrections (PSC) or protests to correct underpayments or overpayments.

6. Related but non-tariff considerations (for awareness)

While not directly changing U.S. import duty rates, several provisions may indirectly affect import admissibility and enforcement risk:

• Labor and forced labor (Article 3.9):
• Taiwan commits to prohibit imports of goods made with forced labor and to recognize U.S. forced labor determinations under 19 U.S.C. § 1307.
• This may increase alignment and information sharing on forced labor enforcement, potentially affecting supply chains that span both jurisdictions.

• Customs and trade facilitation (Article 3.12):
• Enhanced electronic certification data exchange (FSIS) and express shipment facilitation may affect documentation and clearance processes for U.S. exports, but not U.S. import tariffs.

• Economic and national security (Section 5):
• Taiwan commits to align with certain U.S. trade actions against third countries; this may influence global supply chains and availability of certain inputs but does not directly change U.S. duty rates on Taiwan-origin goods beyond the Schedule 2 rules.

7. Key references and where to find details

• Agreement text and annexes (including Schedule 2):
• USTR PDF: Agreement Between the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States on Reciprocal Trade Between the United States of America and Taiwan
• https://ustr.gov/sites/default/files/files/Press/Releases/2026/AIT-TECRO%20ART%20sanitized.pdf

• Executive Orders:
• EO 14257 (April 2, 2025): Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits.
• EO 14360 (November 14, 2025): Modifying the Scope of the Reciprocal Tariffs With Respect to Certain Agricultural Products.
• (Check Federal Register and White House/EO repositories for full texts.)

• HTSUS and MFN rates:
• Harmonized Tariff Schedule of the United States (HTSUS): https://hts.usitc.gov
• Use column 1 (General) MFN rates as the base for applying the 15% rule.

Action for compliance teams: Immediately identify all Taiwan-origin imports, map them to Schedules 2A/2B and MFN rates, update internal duty tables to reflect the 15% minimum rule, and coordinate with brokers to ensure correct duty assessment on and after the Agreement’s effective date.