US-Taiwan trade agreement unchanged by Supreme Court ruling, American and Taiwanese experts say

A Feb. 20 US Supreme Court ruling striking down President Donald Trump’s use of emergency powers to impose global tariffs has reshaped Washington’s trade toolkit. But experts in the United States and Taiwan say the trade deal centered on Section 232 remains minimally affected and unchanged.

A landmark ruling on presidential power

On Feb. 20, the US Supreme Court ruled 6-3 that Trump lacked legal authority to impose broad tariffs under the International Emergency Economic Powers Act (IEEPA), invalidating a cornerstone of his second-term economic agenda.

Chief Justice John Roberts, writing for the majority, said the Constitution assigns taxing and tariff authority to Congress, not the executive branch, and explained that IEEPA does not grant the president open-ended power to impose sweeping import duties.

The decision struck down tariffs imposed on imports worldwide that would have raised hundreds of billions of dollars in federal revenue.

The court did not address how businesses that already paid the tariffs should be reimbursed, leaving that issue to future litigation.

Columbia University economist Jeffrey Sachs said during a Breaking Points interview that this ruling was "clear, correct and bold," and that the previous tariffs already being collected were “illegal.” 

Trump’s retort at the State of the Union

In his State of the Union address, delivered days after the ruling, Trump called the Supreme Court’s decision "very unfortunate" and "disappointing" during his 107-minute-long speech.

Chief Justice John Roberts and three other justices attended the event. According to CNN, Trump previously stated that they were "barely invited," and that he would not "care less if they come."

He also reiterated his administration's stance that alternative legal basis could be applied in order to still impose similar tariffs. Trump later declared that he would instead impose a 10% global tariff, later raising it to 15%, under Section 122 of the Trade Act of 1974.

Taiwan’s reactions to the ruling

At a press conference, Taiwan’s Vice Premier Cheng Li-chiun (鄭麗君) said that the ruling centered narrowly on the federal government’s misuse of the IEEPA and stressed that the ruling does not affect Section 232. She said the preferential tariff treatment Taiwan secured under Section 232 as part of a Taiwan-US investment MOU remains unchanged.

According to Taiwan's Central News Agency, economist and former Deputy Minister of Foreign Affairs Roy Lee Chun (李淳) said that the Taiwan–US trade agreement rests on two distinct pillars.

The first, he said, consists of Taiwanese corporate investment commitments in the US in exchange for assurances of high exemption thresholds and preferential tariff rates in the final Section 232 outcomes for semiconductors and advanced technologies. This component is unaffected by the Supreme Court ruling and represents a highly favorable outcome Taiwan must firmly defend.

Given that the investment MOU already places Taiwan in a stronger position than many competitors, he stated, the government should move swiftly to secure legislative approval and lock in these gains.

The second pillar involves Taiwan’s market opening measures, regulatory alignment, and procurement commitments in return for a pledge that any reciprocal tariffs would be capped at 15% and not stacked. This latter element does face uncertainty following the invalidation of reciprocal tariffs. 

However, he said, it makes the deal more valuable. As global demand for bilateral negotiations with Washington is set to surge, Taiwan — often disadvantaged by political constraints — effectively holds a rare fast-track credential because of this existing framework.

Wang Hung-jen (王宏仁), a professor of political science at National Cheng Kung University, told TCN that the ruling sends a clear signal that US executive power exercised in the name of economic security is not without limits.

However, for Taiwan, he stated, the key is not the power division between US executive and judiciary branches, but something more nuanced. He said that despite the ruling, America’s strategic trajectory remains intact: Tariffs continue to be viewed as instruments of national competition.

He observed that most countries are responding not by reopening negotiations, but by waiting, adjusting, and avoiding becoming the next target. Taiwan, he cautioned, would incur far greater political costs if it misread judicial restraint as license to revisit existing commitments.

Chen Fang-yu (陳方隅), an associate professor of political science at Soochow University, told TCN that tariffs are still a central instrument to Trump's policy approach, which he described as treating trade tools as expressions of state power.

In the modern geopolitical and geo-economic environment, he argued, trade relationships increasingly function as security partnerships. Taiwan should cherish this agreement and bond, he said.

He added that long before Trump’s tariff policies, semiconductor investment decisions — including capacity expansion and US investment plans by TSMC — were already driven by structural demand. He said that TSMC Chairman C.C. Wei (魏哲家) and other industry leaders have repeatedly said that overseas investment is a commercial inevitability rather than a political concession.

Taiwan-based political analyst Wang Hao (汪浩), an Oxford PhD and former investment banker, wrote on social media that even after the ruling, if Taiwan unilaterally tears up the agreement, it will prompt Washington to initiate a Section 301 investigation.

He further argued that Taiwan is among US’ top five sources of trade deficits, a position made more politically sensitive by AI-driven export growth. If deemed to engage in unfair trade, tariff rates could rise higher, hitting Taiwanese companies and unsettling supply chains.

The ruling’s impact on Taiwan according to American experts

At an event titled "Toward a Stronger US-Taiwan Partnership: Unpacking the Agreement on Reciprocal Trade" at Hudson Institute in Washington, DC, Senior Fellow Riley Walters said that although he expects most trade deals to fail to be completed after the Supreme Court ruling, Taiwan, South Korea, and Japan still face unavoidable negotiations over Section 232 tariffs.

He explained that Section 232 reviews cover automobiles, lumber, timber, semiconductors, pharmaceuticals, and other strategic products. Specifically in Taiwan’s case, more than 80% of its exports to the US potentially fall under Section 232 coverage, meaning the overwhelming bulk of Taiwanese shipments could be affected.

Against this backdrop, he argued, the use of the IEEPA and thus the Supreme Court’s recent ruling, is of secondary importance. The decisive issue for Taiwan, he stated, is Section 232, not IEEPA.

At the same event, Bonnie Glaser, managing director of the Indo-Pacific Program at the German Marshall Fund of the United States (GMF) said that the Trump administration obviously had anticipated this possible scenario of the Supreme Court ruling.

There was clearly preparation for this outcome, she said, highlighting the fact that the Trump administration has other legal authorities at its disposal beyond IEEPA.

As a result, she argued, the Trump administration is likely to pursue alternative statutory justifications to sustain its tariff agenda. She posited that, “they will find some other way to justify these tariffs.”

Rupert Hammond-Chambers, president of the US-Taiwan Business Council, concurred with Bonnie Glaser. He pointed to the intense behind-the-scenes pressure surrounding the US-Taiwan trade agreement, particularly efforts to get it done prior to the Supreme Court’s announcement.

“I genuinely believe this is a win-win,” he added, saying that both the US and Taiwan are deeply invested in the outcome that they will keep the deal intact against the backdrop of the Supreme Court ruling.  

On the other hand, senior fellow and director of Trade and Economic Statecraft at the Brookings Institution Kari Heerman wrote that even after the Supreme Court ruling, uncertainty remains. She said that allies and businesses would be left uncertain about Washington’s policy direction as long as its trade policy remains driven by executive discretion exercised through statutes never designed for systemic restructuring.