Taiwan watching for U.S. Supreme Court ruling on Trump tariffs: Premier

Taipei, Jan. 20 (CNA) Taiwan is watching for an impending ruling by the United States Supreme Court on tariffs imposed under President Donald Trump, even as trade negotiations between Taipei and Washington near completion, Premier Cho Jung-tai (卓榮泰) said Tuesday.

Taiwan is finalizing nine months of negotiations with the U.S. on the tariff issue but that could be undermined if the Supreme Court were to rule that Trump's so-called reciprocal tariffs were unconstitutional.

Trump has said the U.S. would simply impose a 10 percent import duty on all goods should the Supreme Court rule against his administration.

Cho said the U.S. government is already shifting some products previously subject to Trump's "reciprocal" tariffs to Section 232 of the U.S. Trade Expansion Act as a precaution against an unfavorable Supreme Court ruling.

Cho was speaking at the first press briefing following the return of Vice Premier Cheng Li-chiun (鄭麗君) and Taiwan's trade negotiations team from the U.S.

The team reached a tentative agreement to lower the U.S. import duty on Taiwan-made goods from 20 percent to 15 percent, the same as those applied to Japan and South Korea, Taiwan's major competitors, as well as the European Union.

The agreement would also grant semiconductors and related products from Taiwan the most favorable treatment under Section 232, though final tariff rates and quota arrangements have yet to be determined.

● U.S. lowers tariff on Taiwanese goods to 15% in trade deal (update)

"One of the clauses stipulates that for any items added to Section 232 in the future, Taiwan and the U.S. will establish a negotiation mechanism to seek the best possible terms," Cheng said at the same event.

"Regardless of uncertainties or changes in tariff policies, we will continue to negotiate for the best outcomes and work to mitigate uncertainty and ensure stability," she said.

In exchange for the U.S. lowering the import duty, Taiwan signed a memorandum of understanding (MOU) committing Taiwanese companies to at least US$250 billion in direct investment in the U.S. and the government to providing up to US$250 billion in credit guarantees for other companies investing in the U.S.

Asked to elaborate on the credit guarantees, Cheng said the government plans to guarantee up to 50 to 60 percent of loans, with a leverage multiple of 15 to 20 times, putting the estimated funding required for the mechanism at between US$6.25 billion and US$10 billion.

The scheme can be built up in stages, she said, noting that the MOU does not specify a time limit and that companies will apply for financing only when needed.

Under the national financing guarantee framework, dedicated funds for the credit guarantee scheme would be jointly contributed by the government and banks.

Cheng said the government is considering raising part of the funding through the National Development Fund and will also invite both state-owned and private banks to participate.