Taipei: Taiwan is closely monitoring a forthcoming decision by the United States Supreme Court regarding tariffs imposed during President Donald Trump's administration. This scrutiny comes at a critical juncture as trade negotiations between Taipei and Washington are nearing their conclusion, Premier Cho Jung-tai announced on Tuesday.

According to Focus Taiwan, Taiwan has been engaged in nine months of intensive discussions with the U.S. concerning the tariff issues. However, the progress made could be jeopardized if the Supreme Court rules that Trump's "reciprocal tariffs" are unconstitutional. In anticipation of an unfavorable ruling, Trump has indicated that the U.S. might impose a blanket 10 percent import duty on all goods.

Premier Cho noted that the U.S. government is already taking precautionary measures by shifting some products, previously subjected to "reciprocal" tariffs, to Section 232 of the U.S. Trade Expansion Act. This was disclosed during a press briefing following Vice Premier Cheng Li-chiun and Taiwan's trade negotiations team's return from the U.S.

The negotiators have tentatively agreed to reduce the U.S. import duty on Taiwanese goods from 20 percent to 15 percent, aligning with the rates for Japan, South Korea, and the European Union. Additionally, the deal proposes the most favorable treatment under Section 232 for semiconductors and related products from Taiwan, although final tariff rates and quota arrangements remain undecided.

Vice Premier Cheng announced that a key clause in the agreement provides for a negotiation mechanism between Taiwan and the U.S. for any future additions to Section 232, emphasizing their commitment to securing optimal terms despite potential policy changes.

In return for the tariff reduction, Taiwan has pledged a memorandum of understanding (MOU) for at least US$250 billion in direct investments from Taiwanese companies in the U.S. Furthermore, the Taiwanese government promised up to US$250 billion in credit guarantees for other companies investing in the U.S.

Cheng elaborated that the government plans to cover 50 to 60 percent of loan guarantees, leveraging between 15 to 20 times, which would require an estimated funding of US$6.25 billion to US$10 billion. This scheme is flexible and can be progressively developed without a specified time limit, allowing companies to apply for financing as needed.

The funding for the credit guarantee scheme will be a collaborative effort between the government and banks, with considerations to raise part of it through the National Development Fund. Both state-owned and private banks will be invited to participate in this initiative.