The US government announced on August 13 Eastern Time that it would impose differentiated tariff measures on globally imported unmanned aircraft systems (UAS) and their components pursuant to Section 232 of the Trade Expansion Act of 1962. Large drones and those with sensitive functions originally face a 100% tariff, while small and medium-sized drones generally face a 25% tariff.
The Ministry of Economic Affairs stated in a press release on August 14 that products from Taiwan, the EU, Japan, South Korea, and Switzerland, if meeting US requirements on critical component and technology sourcing, qualify for a 15% tariff not stacked on MFN, making them among the countries with a relatively lower rate under the measures. The ministry noted that this will help maintain the relative competitive conditions for Taiwanese products exported to the US, and that domestic firms may leverage the tariff gap with other countries to capture potential order transfers and expand export opportunities to the US.
The ministry stated that Taiwan's drone industry currently focuses mainly on models under 25 kg, with models under 5 kg being the primary export products, mainly used in inspection and surveillance. For large drones over 25 kg, the international civilian market is primarily used for agriculture, where Chinese manufacturers still hold a certain advantage. The ministry believes that as the US and other countries continue to strengthen drone supply chain security and domestic production capacity, this also presents potential development opportunities for Taiwanese firms to enter the large drone and critical component markets.
The 15% lower rate requires that critical components and technology substantially originate from designated countries or the US, which is consistent with the government's policy direction of promoting a non-red supply chain for drones. The ministry said it will assist firms in reviewing bills of materials and critical component sources, and continue to link with US, Japanese, and European partners' technology and supply chain capabilities to help firms comply with US regulations and qualify for the lower rate.
In addition, in response to market access requirements arising from the US Federal Communications Commission (FCC) adding foreign-made drones and critical components to its Covered List, the ministry noted that it has facilitated ITRI as the sole overseas Green UAS certification site and the Metal Industries Research & Development Centre in connecting with Blue UAS certification, helping firms meet US certification requirements and enhancing the competitive advantage of Taiwanese drone products entering the US market.
