Taiwan pushes for special status as U.S. courts weigh fate of IEEPA-based duties
President Donald Trump's expansive use of emergency powers to impose tariffs is under growing legal pressure, adding fresh uncertainty to the global trade landscape and prompting recalibrations across Asia, particularly in Taiwan.
At the heart of the legal battle is Trump's reliance on the International Emergency Economic Powers Act (IEEPA) to enact sweeping tariffs, including a controversial "reciprocal" tariff regime targeting trading partners with higher duties on U.S. goods. A U.S. federal court recently ruled that the President had exceeded his authority by invoking IEEPA based on issues like fentanyl trafficking and trade deficits, which the court found did not constitute national emergencies under the law. The decision threatened to dismantle a key component of Trump's tariff strategy and reduce the overall U.S. effective tariff rate.
However, the ruling has not yet taken effect. The U.S. Court of Appeals for the Federal Circuit has granted a temporary stay, allowing the tariffs to remain in place while the administration prepares to appeal the case to the Supreme Court. According to Bloomberg, a full briefing schedule is set to run through June 9, leaving open the possibility that the tariffs could stay in place for several more months. Trump has strongly criticized the original ruling, calling it "so wrong and so political," and accused judges of interfering with sensitive trade negotiations.
For now, the legal reprieve gives Trump's team breathing room, but the longer-term outlook is uncertain. Should the courts ultimately strike down the IEEPA-based duties, the administration would be forced to rely on more legally durable—but slower—alternatives.
Among those alternatives is Section 232 of the Trade Expansion Act, a national security tool previously used to impose tariffs on steel, aluminum, vehicles, and auto parts. Several new investigations are underway under this statute, targeting sectors including trucks, copper, semiconductors, and pharmaceuticals. While Section 232 is seen as more likely to withstand legal scrutiny, it typically takes months to move from investigation to implementation.
Other options include Section 122, which allows for temporary tariffs of up to 15% but for a maximum of 150 days, and Section 301 of the Trade Act of 1974, which underpinned earlier tariffs on China. Section 301 offers more flexibility and has historically allowed for faster action against unfair trade practices. However, it is unclear whether Trump intends to revive this authority in the current context.
Another path—going through Congress—remains politically unattractive for the Trump camp. With tight margins in both chambers and a risk that lawmakers could block tariffs on allied countries, the administration believes that route would delay implementation and "completely destroy presidential power," in the words of one official.
While legal strategies play out in Washington, ripple effects are being felt across the Pacific. In Asia, trade-dependent economies are adjusting to the heightened uncertainty, none more visibly than Taiwan.
Despite the legal cloud over Trump's tariff powers, Taiwan is doubling down on its efforts to secure a bilateral trade agreement with the U.S. The island faces the potential reimposition of a 32% reciprocal tariff if the court stay is lifted and Trump's original IEEPA-based plan is reinstated. In anticipation, Taipei is pushing for a fast-track deal and requesting that the U.S. lower tariffs on Taiwanese goods—ideally below the rates applied to other countries.
"We're glad to see debates among different branches of the U.S. government," said Taiwan's Deputy Foreign Minister intervewed by Bloomberg. "It makes everything more reasonable and more acceptable." The official emphasized that Taiwan views itself as a "special someone" in U.S. trade relations and hopes to be recognized as such in ongoing negotiations.
Taiwan is offering to increase imports from the U.S.—including energy, agricultural products, and military goods—as part of its bid to reduce its trade surplus with Washington. Officials are also considering lowering Taiwan's 17.5% tariff on U.S. automobiles and expanding access for American agricultural products beyond the current beef and pork imports.
However, concerns remain that new U.S. tariffs on semiconductor imports could undermine Taiwanese chipmakers' investment plans by disrupting their cash flows. Given Taiwan's central role in global chip supply chains, such measures would not only affect the island's economy but could also reverberate throughout the tech industry.
As the legal dispute over IEEPA-based tariffs heads toward its next phase, global markets and policymakers alike are left in a state of limbo. The outcome could redefine the limits of presidential authority on trade—and reshape the economic balance between Washington and its partners in Asia.
Article edited by Joseph Chen
