American technology not a way around U.S. content rule: Trade office

Taipei, April 8 (CNA) Taiwanese exporters will not be able to claim that components in their products made with American technology should be exempt from United States tariffs, according to the Office of Trade Negotiations under Taiwan's Executive Yuan.

U.S. President Donald Trump recently unveiled sweeping "reciprocal" tariffs on countries that have large trade surpluses with the U.S., including Taiwan and China, which will face 32 percent and 34 percent import duties, respectively, starting April 9.

The tariffs will be guided by the U.S. federal government's tariff document 9903.01.34, also known as the U.S. content rule, which stipulates that products with at least 20 percent of their content made in the U.S. can be exempt from tariffs on that content.

The U.S. content rule has been described as a "humanitarian corridor" as Taiwanese manufacturers, including iPhone and MacBook assemblers and artificial intelligence makers, are studying the rules hoping to secure relief from Trump's tariffs.

One possibility is that components or assemblies using American technology could be tariff-exempt as "U.S. content," but the trade office said Monday that the content rule does not apply to technology.

For hardware, the office said Taiwanese exporters need to provide documents to prove the American origin of their products' components when they declare the product at U.S. Customs.

Also, even if a foreign product has more than 20 percent of its content made in the U.S., the office said, the remaining 80 percent of the product value made abroad will still be subject to import duties, the office said.

That means, according to Taiwan's top trade negotiator Yang Jen-ni (楊珍妮), that a Taiwan-made product valued at US$100 with US$20 worth of components made in the U.S. will be taxed based on the remaining value of US$80.

The office said Taiwan is not expected to benefit much from the U.S. content rule as only a small number of Taiwanese firms buy components from American suppliers and use them in products resold to the U.S. market.

For the many Taiwanese AI server makers who have moved production to Mexico in recent years hoping to capitalize on the North America free market, these suppliers will still need to prove components they use are made in the U.S. to get tariff exemptions, the office said.

The office said any actual calculation of how U.S. content is calculated will be up to U.S. Customs' assessments.