Does the Supreme Court ruling void the U.S.-Taiwan trade deal?

Not directly. The ruling invalidated the IEEPA tariff authority, but bilateral trade agreements are separate legal instruments. However, the tariff rates that formed the deal's negotiating leverage are now on different legal footing, creating uncertainty about long-term enforceability.

How does the new 15% global tariff affect Taiwan?

Taiwan currently faces the same 15% rate that was negotiated in the trade deal, but now under Section 122 of the Trade Act of 1974. This statute limits tariffs to 150 days without congressional approval, making the rate temporary rather than permanent.

Will TSMC's U.S. investments continue despite the tariff uncertainty?

Early-phase investments, including the Arizona fab facilities, are expected to proceed as they are underpinned by CHIPS Act subsidies and Commerce Department agreements separate from the tariff framework. Later investment tranches could be affected if tariff instability persists.

Could the government owe $175 billion in tariff refunds?

The Penn Wharton Budget Model estimates that the government could owe more than $175 billion in refunds to importers who paid duties under the now-unconstitutional IEEPA regime. The Supreme Court did not explicitly address refunds, and the process remains legally and logistically complex.

What happens when the 150-day Section 122 tariff period expires?

If Congress does not authorize an extension or replacement framework, the temporary tariffs will expire and the U.S. will need to either accept lower tariff rates or find alternative legal authority to maintain trade pressure on partners including Taiwan.

U.S. and Taiwan Trade Deal Thrown Into Uncer...

The sweeping trade agreement between the United States and Taiwan — signed just eight days ago to slash tariffs, lock in $250 billion in semiconductor investments, and deepen economic ties across the Pacific — now faces a dramatically altered legal landscape after the Supreme Court struck down the tariff framework that underpinned much of the deal's architecture.

On February 20, 2026, the Supreme Court ruled 6-3 in Learning Resources v. Trump that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs, invalidating the broad trade levies that had reshaped global commerce since April 2025. Chief Justice John Roberts, writing for the majority alongside Justices Gorsuch, Barrett, Sotomayor, Kagan, and Jackson, concluded that Trump's use of IEEPA represented a "transformative expansion of the President's authority over tariff policy" that lacked clear congressional authorization. Hours later, President Trump responded by imposing a new 10% global tariff under Section 122 of the Trade Act of 1974 — then raised it to 15% the following day.

The implications for the U.S.-Taiwan trade agreement are profound. The original deal, negotiated under the umbrella of Trump's aggressive tariff regime, reduced duties on Taiwanese exports to 15% while securing massive commitments from TSMC and other Taiwanese firms to invest in American chip fabrication. With the legal basis for much of U.S. trade policy now upended, both governments face urgent questions about which provisions survive, how the new tariff structure affects semiconductor investment timelines, and whether Beijing will exploit the confusion.

What the Original Deal Promised — and What Now Hangs in the Balance

The U.S.-Taiwan trade agreement, signed on February 13, 2026, was among the most ambitious economic pacts of the Trump administration's second term. Under its terms, tariffs on Taiwanese exports to the United States were cut to 15%, down from the punitive rates imposed during the administration's "liberation day" tariff campaign. In return, Taiwan committed to purchasing $84.8 billion in American goods — including liquefied natural gas, commercial aircraft, and power generation equipment — through 2029.

The centerpiece was a $250 billion semiconductor investment program, with Taiwan Semiconductor Manufacturing Company (TSMC) and allied firms pledging to expand chip fabrication facilities in Arizona, Texas, and Ohio. The deal also eliminated steep tariffs on U.S. agricultural exports to Taiwan, with pork tariffs dropping from 40% to 10% and other agricultural duties seeing similarly aggressive reductions.

The Supreme Court's ruling does not directly void bilateral trade agreements. However, the tariff rates that formed the basis of the deal's bargaining leverage — and the economic calculus behind Taiwan's concessions — were rooted in the IEEPA framework the court has now declared unlawful. Legal scholars say the deal's enforceability will depend on whether the new Section 122 tariffs, limited to 150 days without congressional approval, can replicate the same pressure.

The Supreme Court Ruling: A Constitutional Reset on Trade Power

The court's decision in Learning Resources v. Trump represents the most significant judicial intervention in U.S. trade policy in decades. The 6-3 majority found that IEEPA, enacted in 1977, grants the president authority to "regulate importation" of foreign property during national emergencies — but that this language does not extend to imposing tariffs. "When Congress grants the power to impose tariffs, it does so clearly and with careful constraints," Roberts wrote. "It did neither here."

The ruling invalidates the reciprocal tariffs Trump unveiled at his April 2025 "liberation day" event, as well as IEEPA-based duties on China, Canada, and Mexico tied to fentanyl trafficking allegations. The Penn Wharton Budget Model estimates the federal government could owe more than $175 billion in refunds to importers who paid duties under the now-unconstitutional regime. Justice Kavanaugh, writing in dissent, warned that the refund process would be a "mess" and that the ruling could generate uncertainty regarding trade arrangements worth "trillions of dollars."

Notably, the three conservative justices in the majority — Roberts, Gorsuch, and Barrett — relied on the major questions doctrine, which holds that sweeping assertions of executive power must be explicitly authorized by Congress. The three liberal justices reached the same conclusion through statutory interpretation alone, finding that IEEPA's text simply does not encompass tariff authority.

Trump's Response: New Tariffs, Same Fight, Different Legal Footing

Within hours of the ruling, President Trump condemned the decision as "ridiculous, poorly written, and extraordinarily anti-American" and signed an executive order imposing a 10% global tariff under Section 122 of the Trade Act of 1974. By Saturday, February 21, he had raised the rate to 15%, matching the level negotiated in the Taiwan deal — but on a fundamentally different legal basis.

Section 122 allows temporary tariffs for up to 150 days without congressional approval, a stark contrast to the open-ended authority the administration had claimed under IEEPA. Any extension beyond that window requires Congress to act — a significant constraint given the politically fractured legislature heading into November's midterm elections.

For the Taiwan deal specifically, the immediate tariff environment is paradoxically similar: Taiwanese goods still face a 15% rate entering the U.S. market. But the legal durability of that rate is now measured in months rather than years. Trade analysts say this uncertainty could slow some of the investment commitments Taiwan made, particularly the later phases of TSMC's multi-year fab construction program, where ground hasn't yet been broken.

TSMC and the Semiconductor Calculus: $1.9 Trillion Giant Holds Steady

Taiwan Semiconductor Manufacturing Company, the world's dominant advanced chipmaker, finds itself at the intersection of trade policy upheaval and record-breaking market performance. TSMC shares closed at $370.54 on February 21, up 2.8% on the day and within 3% of their all-time high, giving the company a market capitalization of $1.92 trillion.

The company's financial fundamentals remain formidable. Gross margins of approximately 62% and trailing earnings per share of $10.54 reflect the pricing power that comes from manufacturing over 90% of the world's most advanced chips. The stock trades at roughly 35 times earnings — a premium justified, analysts say, by the irreplaceable nature of TSMC's fabrication capabilities and the secular growth of artificial intelligence workloads.

TSMC has already committed approximately $65 billion to its Arizona operations, with the first facility expected to begin production in 2026. Industry observers say the early-stage investments are unlikely to be affected by the tariff ruling, as they were already underpinned by the CHIPS Act subsidies and separate agreements with the Commerce Department. However, the broader $250 billion investment framework negotiated as part of the Taiwan deal encompasses commitments from multiple Taiwanese firms, and the later tranches may be revisited if the tariff landscape remains unstable.

Beijing's Calculus: Opportunity in Washington's Legal Chaos

China, which considers Taiwan a breakaway province and has long opposed any formal economic agreements between Taipei and Washington, was quick to denounce the original trade deal as interference in its internal affairs. The Supreme Court's invalidation of the tariff framework presents Beijing with both a diplomatic opening and a strategic dilemma.

On one hand, the ruling weakens the coercive trade architecture that Trump used not only against Taiwan's competitors but against China itself. The IEEPA-based tariffs on Chinese goods — some exceeding 100% on specific categories — are now legally void, potentially easing pressure on Chinese exporters. On the other hand, the bipartisan nature of U.S. support for Taiwan (the original deal was praised by lawmakers on both sides of the aisle) suggests that semiconductor reshoring and deepened U.S.-Taiwan ties enjoy a durable political consensus that transcends any single president's tariff authority.

China's Foreign Ministry reiterated its opposition to any U.S.-Taiwan agreements that imply sovereign status for the island, while Chinese state media characterized the Supreme Court ruling as evidence of "fundamental dysfunction" in American governance. Meanwhile, U.S. trade partners from Canada to the European Union cheered the ruling, with Canada's trade minister calling the IEEPA tariffs "unjustified" and urging a return to negotiated trade frameworks.

Conclusion

The U.S.-Taiwan trade agreement, signed barely a week before the Supreme Court dismantled the tariff architecture that surrounded it, now exists in a state of legal and economic limbo. The core bargain — American market access for Taiwanese goods in exchange for massive semiconductor investments and agricultural purchases — retains broad political support in both Washington and Taipei. But the transactional leverage that made the deal possible has been fundamentally altered.

The next 150 days will be critical. If Congress fails to authorize a permanent replacement for the IEEPA tariffs, the Section 122 levies will expire and the United States will face a choice between returning to pre-Trump tariff levels or finding yet another legal mechanism to maintain trade pressure. For Taiwan and TSMC, the question is whether the investment commitments already made — billions of dollars in concrete, steel, and silicon — create enough momentum to carry the partnership forward regardless of what happens in Washington's courts and corridors.

The deeper irony may be that the Supreme Court's ruling, by constraining executive trade power and forcing tariff policy back toward Congress, could ultimately produce a more stable and predictable framework for deals like the Taiwan agreement. That is, if lawmakers can summon the political will to build one. In the meantime, the world's most important trade relationship — and the chips that power the global economy — remain caught between judicial precedent, presidential defiance, and the ticking clock of a 150-day statute.