Taiwan’s Minister of Economic Affairs, Kuo Jyh-huei, said Tuesday that recent adjustments to U.S. tariff policy mainly affect specific sectors, including machine tools and machinery, while overall industrial conditions this year are better than last year.
He also pointed to a public opinion survey released by Cathay Financial Holding, which showed that nearly half of respondents view the Taiwan-U.S. tariff agreement favorably. Forty-eight percent said they expect the agreement to benefit both the stock market and gross domestic product, while 19 percent expressed concern that some industries could move overseas and job opportunities may decline.
New US tariffs focus on limited sectors
Last week, the U.S. Supreme Court ruled that President Donald Trump had exceeded his authority under the International Emergency Economic Powers Act (IEEPA) by imposing reciprocal tariffs on multiple countries. Trump then invoked Section 122 of the Trade Act of 1974 to introduce a new 15 percent global tariff on imported goods.
At a “Latest Tariff Situation Briefing” on Feb. 24, Kuo said the current temporary tariff on industrial products stands at 15 percent plus the most-favored-nation (MFN) rate. Compared with a 2024 baseline, he acknowledged there is a negative effect. Compared with last year’s 20 percent temporary tariff plus MFN, however, conditions have improved.
He added that if Section 232 treatment is factored in, with semiconductors receiving zero tariffs and exemptions, the impact would be more favorable. Whether measured against 2024, when no reciprocal tariffs were in place, last year’s 20 percent temporary rate, or the current 15 percent rate, this year’s environment is comparatively better, he said. Kuo described the outcome of negotiations on the Taiwan-U.S. Agreement on Reciprocal Trade (ART) as solid and said the priority now is implementation.
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According to Kuo, industries including general chemicals, building materials, textiles and apparel, transportation equipment, and machinery have been more affected compared with the period before reciprocal tariffs were introduced in 2024. He said targeted support will be provided. Even so, he maintained that all sectors are in a stronger position than they were a year ago.
In the machine tool sector, the tariff rate has fallen from 24 percent last year to 19 percent. While still slightly above Japan and South Korea, whose rates previously stood at 17.6 percent and 15 percent respectively, the competitive gap has narrowed. Bringing the rate down further to 15 percent remains an objective under the ART framework, he said.
For machinery products, tariffs have declined from 21.5 percent to 16.5 percent. Competing economies were mostly around 15 percent last year, leaving what Kuo described as a much smaller difference this year.
Taiwan continues to hold a competitive position in hand tools, where Vietnam and China are key rivals, although the margin has narrowed. The same dynamic applies to plumbing hardware, plastics, textiles, and medical equipment. As long as competition remains on equal terms, Taiwan can compete, Kuo said.
Auto parts fall under Section 232 provisions and are not affected by the latest changes. The Ministry of Economic Affairs said Taiwan and its major competitors — the European Union, Japan, and South Korea — are all subject to a 15 percent tariff rate in that category.
Survey shows cautious optimism
Cathay Financial’s February National Economic Confidence Report, cited by NOWnews, found that 41 percent of respondents believe the tariff agreement will strengthen the international competitiveness of Taiwan’s semiconductor industry. Sixteen percent said it would benefit traditional industries. Nineteen percent expressed concern about possible relocation abroad and reduced employment opportunities.
Forty-eight percent expect the agreement to have a positive impact on both the stock market and GDP. Some respondents estimated it could lift Taiwan’s main stock index by 500 to 1,000 points. The survey was conducted before the Supreme Court ruling on Trump’s reciprocal tariffs. A total of 53.4 percent said they expect the stock market to continue rising, 22 percent anticipate a decline, and 14.3 percent foresee no change.
Taiwan’s National Development Council said December’s business climate monitoring indicators turned red, with both leading and coincident indicators continuing to rise.
The Cathay survey showed the index measuring optimism about the current economic situation rose to 12.3, while the outlook index rebounded to 4.4. The index of willingness to make major purchases increased to 14.2, and the durable goods consumption index improved to minus 7.6.
On Nov. 28, 2025, the Directorate-General of Budget, Accounting and Statistics projected Taiwan’s economic growth rate for 2026 at 3.54 percent, with inflation at 1.61 percent.
According to the survey, respondents’ average expected growth rate for 2026 was 3.16 percent, with 61 percent forecasting growth above 3 percent. The average expected inflation rate was 2.19 percent, and 54 percent anticipated inflation above 2 percent.
The survey was conducted from Feb.1 to 7, 2026. Electronic questionnaires were sent to members of Cathay Life’s official website and customers of Cathay United Bank, resulting in 14,322 valid responses.
After nine months of negotiations, Taiwan and the United States recently concluded tariff talks and reached an agreement. Taiwan secured a reduction of reciprocal tariffs to 15 percent without stacking the original MFN rate. It also obtained favorable Section 232 treatment for semiconductors and related products, reached consensus on bilateral investment, and agreed that Taiwanese enterprises would independently invest US$250 billion, with the government supporting up to an additional US$250 billion in corporate credit through credit guarantees. The agreement is awaiting formal signing.
On Feb. 20, the U.S. Supreme Court ruled that Trump lacked authority to impose global reciprocal tariffs. Taiwan’s opposition parties criticized the tariff agreement as ineffective and called for renegotiation.
By Li Jingyao
