Steel & Aluminum Tariffs, "First Sale", and U.S.-Taiwan Deal

Summary

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The Trade Guys – Episode Summary

Episode Title: Steel & Aluminum Tariffs, "First Sale", and U.S.–Taiwan Deal
Date: February 23, 2026
Hosts: Scott Miller and Bill Reinsch
Moderator: Alex Kisling
Produced by: Center for Strategic and International Studies (CSIS)

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Episode Overview

In this episode, The Trade Guys dive into three timely trade topics:

• The latest developments and political back-and-forth over U.S. steel and aluminum tariffs and their downstream impacts.
• The introduction of a bipartisan Senate bill to reform the "first sale" customs valuation principle, and what that means for importers.
• An in-depth look at the newly signed U.S.–Taiwan Trade Agreement, with a focus on market access, semiconductors, and the evolving strategic dynamic between the U.S. and Taiwan.

The hosts break down complex policy moves, highlight economic and political tradeoffs, and debate both the technical and broader implications for the U.S. economy and global trade.

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Steel & Aluminum Tariffs: Policy Confusion and Economic Impact

[00:07 - 13:00]

Key Discussion Points

• Trump Administration Whiplash:
  Controversy arose over reports the administration was considering scaling back metals tariffs for political reasons (affordability), only to be contradicted by White House and USTR comments.

  • "It's not at all clear what they're going to do because different people in the administration have said different things." — Bill [01:17]

• Economic Reality of Tariffs:

  • Tariffs are designed to raise prices on imports to protect domestic industry.
  • Including "downstream" products (parts, components, even odd categories like knitting needles) expanded the impact and created substantial compliance burdens:
    • "The point of tariffs is to raise prices…to protect the domestic [industry]." — Bill [01:34]
    • "Now they're talking about things like the famous Secretary Lutnick soup can, and they're also talking about deodorant spray cans, beer cans." — Bill [02:41]

• Compliance Headaches:
  Importers must now parse out steel/aluminum content by percentage—creating paperwork and administrative overload:

  • "Companies have had to hire extra people just to do the paperwork and that's a bad thing." — Bill [04:57]

• Policy Options Under Debate:

  1. Simplify paperwork (favored by USTR Greer)
  2. Exempt more products from tariffs
  3. Do nothing (status quo, preferred by some like Peter Navarro)
     Uncertainty remains on the path forward.

Political & Economic Narrative

• Trump's Broader Economic Sales Pitch:
  Tariffs are just one part of a larger economic agenda—protectionism, tax cuts, deregulation, and reshoring—but the coherence of the messaging and its resonance with the public is lacking.

  • "He's got to sell his program, which is a major change in the way the US Economy functions…" — Scott [06:06]
  • "Nobody's told that story in a compelling way." — Scott [08:51]

• Public Reception:
  Despite favorable employment and manufacturing numbers, the public remains skeptical:

  • "I think their story is being told. The public's not buying it. I mean, it's ironic because it's exactly the same problem that Biden had." — Bill [09:05]
  • Recent polling shows 70% of U.S. adults rate economic conditions as "fair" or "poor." [09:44]

• Distributional Effects:
  Discussion of how tariffs are a regressive tax, disproportionately affecting lower-income consumers despite official claims:

  • "Of course it's a regressive tax." — Bill [10:54]

Memorable Moment

• "Unless you're contemplating an old lady trying to stab Trump with her knitting needle…" — Bill, humorously questioning the national security logic for including knitting needles under the tariffs [01:56]

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"First Sale" Principle in Customs Valuation: Policy & Practicalities

[13:00 - 21:40]

Key Discussion Points

• Background:
  The "first sale" rule allows importers to declare the value of goods based on the price in the initial sale (often foreign factory to intermediary), rather than the "last sale" (intermediary to U.S. retailer), which is usually higher.

• Senate Bill Proposal:
  Senators Cassidy and Whitehouse introduced a bipartisan bill to eliminate first sale, calling it a "customs loophole":

  • "[The bill would] close a customs loophole allowing importers to avoid duties by declaring an artificially low value for their goods." — Alex [13:55]

• Technical Explanation:

  • "If the foreign manufacturer is selling directly to Walmart ... there's only one sale and one transaction. The problem arises when there’s a middleman." — Bill [17:45]
  • Example:
    • Sale 1: Factory sells to middleman for $100 → 20% tariff = $20
    • Sale 2: Middleman sells to retailer for $130 → 20% tariff = $26
      Moving to "last sale" would raise duty from $20 to $26 per item.
  • Legislative and case law history: CBP has previously tried to move to last sale, but lobbying kept first sale permissible.

• Administrative Simplicity vs. Business Costs:
  Customs prefers a single standard for simplicity, retailers/industry want to retain flexibility for cost savings.

Notable Quotes

• "From the retailer's perspective...he's now paying $6 more than he's paying if you calculate on the basis of first sale." — Bill [18:43]

• "I would note that by inflating or raising the cost of duties...you're actually raising the cost of goods sold, which lowers the ultimate revenue that's taxable from the retailer itself." — Scott [16:39]

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The U.S.–Taiwan Trade Agreement: Market Access and Security Implications

[21:40 – End (~27:30)]

Key Discussion Points

• Overview:
  The new agreement lowers U.S. tariffs on Taiwanese goods (from 20% to 15%) in exchange for:

  • $250 billion Taiwanese chip-sector investment in U.S.
  • Taiwan eliminating/reducing 99% of its tariffs.
  • Taiwan committing to major U.S. purchases (LNG, oil, aircraft, power-generation equipment).

• Long Road to Agreement:

  • Prior talks (since 1994 under TIFA) produced little market access until now.
  • "That's a lot of talking even for old guys like Bill and I... this is Bill Clinton's first term was when this was launched." — Scott [22:14]

• Investment as the Core Issue:

  • The real headline is the semiconductor investment in the U.S., both for economic growth and to enhance mutual security.
  • "Building those state-of-the-art facilities in places like Phoenix, Arizona instead of additional facilities in Taiwan I think is at aid to our security and their security." — Scott [22:43]

• Strategic Tensions:

  • The hosts raise the dilemma:
    • The U.S. wants more chip production at home for security, but Taiwan fears "offshoring" its core industry could reduce U.S. commitment to defending Taiwan.
    • "Why would the United States care about defending Taiwan…if [the chips] move here?" — Bill [25:04]

• Caveats:

  • Much depends on actual implementation; wording "eliminate or reduce" leaves wiggle room.
  • "Let's not count our chickens before they hatch." — Bill [23:52]

Notable Quotes

• "The key to Taiwan's future as a supplier of high tech products ... is semiconductor manufacturing." — Scott [22:40]

• "They've pledged to open up, get rid of a lot of NTBs. This is all good. They've pledged to buy a bunch of stuff ... if it happens." — Bill [23:54]

• "There's a tension... between the United States wanting to have as much [chip capacity] here as it possibly can, and the Taiwanese wanting to retain as much as they can because they think it's essential to their security." — Bill [26:17]

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Timestamps for Key Segments

• Steel & Aluminum Tariffs: 00:07 – 13:00
  • Economic/political implications, compliance, regressive effects
• First Sale: 13:00 – 21:40
  • Explanation and political context of Senate bill reform
• US–Taiwan Trade Agreement: 21:40 – 27:30
  • Deal details, investment and security analysis

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Memorable Moments & Quotes

• "Unless you're contemplating an old lady trying to stab Trump with her knitting needle..." — Bill, on the absurdity of classifying knitting needles as national security–relevant steel products [01:56]
• "That's a lot of talking even for old guys like Bill and I... this is Bill Clinton's first term was when this was launched." — Scott, on the length of U.S.–Taiwan negotiations [22:14]
• "Why would the United States care about defending Taiwan…if [the chips] move here?" — Bill, on the geopolitical dilemma [25:04]

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Takeaways

• U.S. steel and aluminum tariffs continue to provoke both political confusion and practical headaches, as the administration weighs easing compliance versus broader tariff rollbacks.
• The proposed end of the “first sale” rule would mean higher costs for U.S. retailers and, ultimately, consumers—though the administrative burden would be reduced.
• The new U.S.-Taiwan agreement is a significant milestone with real economic and security stakes, yet is fraught with implementation uncertainty and deeper questions about the future U.S.–Taiwan relationship as semiconductor supply chains evolve.

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For more insights and episodes, visit csis.org/podcasts.

Transcript

[A]

I'm Scott.

[B]

I'm Bill and we're the Trade Guys.

[C]

You're listening to the Trade Guys, a podcast produced by CSIS where we talk about trade in terms that everyone can understand. I'm Alex Kisling and I'm here with Scott Miller and Bill Reinsch, the CSIS Trade Guys. Thanks for listening to the Trade Guys. On today's episode, we unpack the Latest developments surrounding U.S. steel and aluminum tariffs. Then we explore the first sale principle and break down the contours of the US Taiwan Trade Agreement. All that and more on today's episode of the Trade Guys. All right, Trade Guys, we're going to start today with a focus on steel and aluminum and specifically whether the Trump administration plans to scale back metals tariffs. The Financial Times ran a story last week suggesting the administration was preparing to do so as it faces political headwinds over affordability. But then the White House pushed back on that reporting, followed by U.S. trade Representative Greer suggesting earlier this week that the administration is open to adjusting how steel and aluminum tariffs are applied. So, Bill, once again, a lot of whiplash here. What's going on?

[B]

Well, it's not at all clear what they're going to do because different people in the administration have said different things and you've pointed to a couple of them. There's really, I think, two issues that are involved here. The obvious one is tariffs raise prices. This is not surprise to anybody. You can have a debate about, you know, how much the prices are going up. But you know, if you think about it, I was just talking to a colleague here about this. If you think about it, the point of tariffs is to raise prices. I mean, that's the objective. You want to make the foreign product more expensive because you're trying to protect the domestic. So it's kind of tilly to argue, as Kevin Hassett seems to be doing, the study by the New York Fed that found, along with a bazillion other studies that in fact tariffs increase prices, that there's something flawed with the economic reasoning. There's no flaw in the economic reasoning. They raise prices. You could argue about how much what's happening with steel has been that this has turned out to has morphed from a medium sized thing to a big thing because the administration decided last year that they would include downstream products, which they call derivatives. So it's not just raw steel and aluminum, it's parts and components that contain steel and aluminum. We made a joke about this when this first happened with their definition of the immediate product and not the downstream products, because the steel products include knitting needles and crochet needles, crochet hooks and things that where the national security threat would be a stretch, you know, unless you're contemplating an old lady trying to stab Trump with her knitting needle. But the downstream issue has made it much bigger because now they're talking about things like the famous Secretary Lutnick soup can, and they're also talking about deodorant, spray cans, beer cans. All of these things are made of metal. They're not, you know, the primary product is deodorant or beer or, you know, whatever's in the can. But the rule has been that steel tariff has to be paid on the proportion of the product that is composed of steel or aluminum. And that has had two consequences. And here's where the administration sort of divides. One consequence has been that it's raised prices on a lot of parts and components that American manufacturers need to make their end products. So if you're making a car or anything that contains metal, you're not just buying raw metal, you are buying some raw metal, but you're also buying semi finished parts and components that will be then further finished in one of your plants for incorporation into the end product. All those prices have now have gone up because they're all steel products. And so the very thing that Trump wanted to do was, which was to promote the reshoring of manufacturing, is not happening to the extent he wants because people that he's trying to help have to pay more for their parts and components. The other piece, which is what Ambassador Greer was speaking to, is that compliance has turned out to be a problem. Nobody had to worry about what the steel content of their deodorant spray was in the past because the tax was on the, the whole product, which is whatever HTS category it's in now that you've got to go through and parse it. You have to figure out first what the percentage of steel in your product is, what percent of aluminum it is, because only by that way can you figure out what the tariff is.

[C]

Well, who's responsible for that?

[B]

Well, the importer who has to figure out, he has to calculate all this stuff. And in addition, you want to figure out, if you can, where the steel came from in case this tariff might not be 50%, which it is for most parties. But if somebody gets a break, then you really need to know the origin of the product because it might not be 50% from where you're getting the steel. And this is what Ambassador Greer was complaining about. He said he's heard from companies that have had to hire extra people just to do the paperwork and that that's a bad thing. Well, he's right. It's a bad thing. But what's interesting is what he was talking about is let's tweak the paperwork to make it simpler. And he was pretty clear, we're not changing the tariffs. We're going to simplify the compliance process. Other anonymous people have said, well, maybe we're going to go through the list of what's covered here and shorten the list and, you know, exempt a bunch of things from actually being covered by the tariffs. And then somebody, other people, Peter Navarro being one, said, no, no, we're not going to do that. So that remains a mystery whether they actually change anything or not. In terms of taking things off the list, that would be big. If they start granting exemptions that would actually make a difference in the marketplace. If the best they can do is try to have a reduced paperwork requirement, I think the impact is going to be marginal.

[A]

Look, I think this is a small window into a much bigger challenge for the administration. And I would never criticize President Trump for salesmanship skills. He's the consummate salesman in many ways. But he's got to sell his program, which is a major change in the way the US Economy functions. And he also needs some measures that are consistent or congruent with the change that he's trying to accomplish. We talked about this a few weeks ago. What the President seems to care about most is that the productive capacity of the U.S. economy. And he wants to make sure the U.S. economy can produce the kinds of things that would be needed under national security situations, among others. But by and large, he has this whole program of low end, abundant energy, lower taxes, less regulation, abundant capital, a whole series of elements that are incentives to locate in the United States and build productive capacity here. On top of it, he adds tariffs, which do create a preference for U. S Made goods. They help export competitiveness as well. He's got other incentives as well. The critical minerals vault we talked about two weeks ago. All these kinds of things are part of a big program that is very different than the way the US Economy has worked in the past and very different than what we measure. And I think Kevin Hassett's criticism of the Fed's economist was more about looking at measures that make sense in a world of Keynesian economics where you're looking at the macro levels of demand and supply and not at the elements of improving and building productive capacity. Sometimes you need new measures. But I have to agree with Kevin Acid in that we always underestimate the actual performance of the administration. So growth rates were wildly underestimated, almost the employment report, it was a matter of the policy they'd implemented. Higher employment for private sector, lower employment for government, and once again exceeding by a wide margin on the actual versus estimates. So for a whole set of reasons probably having to do with whether the measures are the right ones, is we're basically feeding the doomsayers. And I think that's the point he was making. But they need measures that are actually coherent and consistent with what they're trying to accomplish with the economy. Otherwise you can't sell this thing. It just looks like chaos.

[C]

Well, I. But the political pressure is only going to get greater as we get closer to November.

[A]

Right. Clearly. Right. They've got to turn that around. But keep in mind there's a lot of things that have not rolled out yet, like lower tax rates and things like that that people are going to begin to see almost immediately. And frankly there's I think the beginnings of a blue collar job boom in the numbers that were reported last week in terms of employment statistics.

[B]

So.

[A]

And while prices are up modestly, wages, particularly blue collar wages, are up by about double the percent. So there are things that look promising. The problem I see is nobody's told that story in a compelling way.

[B]

Yeah, I don't agree with that. I think their story is being told. The public's not buying it. I mean, it's ironic because it's exactly the same problem that Biden had.

[C]

Exactly.

[B]

You know, Biden tried to sell the American people that these economy was getting better and statistically he was right. I mean it was easy to get better when inflation was 9% and it came way. Yeah, yeah.

[A]

I mean that was only transitory.

[B]

And you know, he kept making the pitch that, you know, prosperity is around the corner and look what happened in the election. Nobody bought that. Trump is actually doing exactly the same thing and he's got numbers. I mean he's not entirely wrong. But nobody's buying it.

[C]

Yes, well, there's a pupil that said looking this earlier, that what, 70 plus percent of U.S. adults rate economic conditions as fair or poor. That's not good.

[A]

No, definitely not. Not with the Dow at 50,000.

[C]

No, exactly.

[A]

You know, it's one of those things. It's like we don't have the coherence that ideally a good sales pitch would like some coherence in the numerical support for the presentation. It's not There.

[B]

Well, and what we're seeing, I think is a reinforcement of what other people have called the K shaped economy, where the rich are spending more and the rich are doing better and better and the poor are doing worse and worse. And the most interesting reflection of that was, I guess today or yesterday when Ambassador Greer was asked on some program, aren't terrorists regressive because everybody pays the same amount of tariffs on food, for example, or on basic commodities are regressive? And his comment was, no, they're not regressive because most of the consumption in the country is being done by the rich. And so they're paying most of the tariffs. That's pretty cold comfort to the poor who are paying the tariffs. And I would say, I don't think

[A]

I would have said that, but that's all right.

[B]

The point about a regressive tax is that the tax technically is the same for everybody, but it's a much smaller proportion of rich people's income, that's a much larger proportion of poor people's income. So of course it's a regressive tax. The frustrating thing to me about some of these arguments, particularly, you know, Hassett's argument about attacking the New York Fed, which is a classic case of shooting the messenger, I mean, they, they, they reported the obvious, that tariffs raise prices and the prices are being paid by the Americans, which virtually every other study that's been done has come to the same conclusion with only a small variation in percentages. And to say that's wrong simply defies all logic. There is a better argument. The argument ought to be that there's a method behind all this. And Scott articulated this. There's a reason why high prices in the end will benefit the economy. Now, I don't believe that, but at least that's a credible argument. And one of the reasons, I think Trump is running into the same problem that Biden is running into Israel, he's not making the arguments that are going to resonate. I mean, another example just to rant on for a minute is in the middle of last night he posted this. U.S. trade deficit is down 78%. Well, everybody spent the day trying to figure out what that means because actually the data for 2025 came out today and the trade deficit, goods and services together actually did go down about $2 billion out of 900 plus trillion dollars total.

[C]

All not 78%.

[B]

Nope. By my calculation, it went down 0.23%, which is very different from 78. Somebody actually tried to figure out what the President was talking about. And it appears what he was doing in a classic case of cherry picking, he compared last January, January of 25's trade deficit, which was a high one because everybody was stockpiling right. With October's trade deficit, which was a low one, whereas the record low one

[A]

actually not even a month here ago, it was just two separate months, a high one and a low one.

[B]

Yeah, he picked the high one. He picked the low one and said, ah, it's down by 78%. In fact, it's down by less than 1/2 of 1%. And in fact, the goods deficit, when services saved us, the goods deficit went up almost $26 billion.

[C]

Just before we move on, I'm going to go off script here a little bit and just give a plug. Yeah. As we were talking about the kind of the wealth gap, I read a great column last night by Greg IP in the Journal about the generational wealth gap. And I, I don't know if Greg's a listener, but it was one of the the best columns I've read on this topic. And the title is over 65 Congratulations, you own the economy. And it really informative for me to look at and encourage our listeners to to give it a read as well. But we must move on. So the next topic we're going to talk about today is the first sale principle. A bill was introduced earlier this month by Senators Cassidy and Whitehouse. So a bipartisan bill to eliminate the first sale method of customs valuation, which they say will, quote, close a customs loophole allowing importers to avoid duties by declaring an artificially low value for their goods. So, Scott, I must admit this one is about as clear as mud to me. So give me a little background on first sale and what are we talking about here and what's at stake?

[B]

Take us into the weeds, Scott. That's right.

[A]

Yes. And we'll try to do this in a constructive way. But probably the best comparison is if you own a home, you'll get a real estate tax bill. One of the things, and in this case duties are of course, taxes. The duty that is charged on an import is payable by the importer and the importer has two numbers to deal with to determine the amount of the duties on that importation. The first is the tariff rate or the duty rate, which is expressed as a percent of the value of the goods. Much like if you own a home and you have a real estate tax, the real estate tax is expressed in mills or percent of the value of the home. Then the question is what's the Agreed value. And that's very complicated process. In real estate. There's a whole theory of assessed value that whatever county you live in probably has many pages of paper that are attached to your bill to explain why they did it. Right. But in any case, you need to know what the value.

[C]

Those are also clear as mud.

[A]

Yes. Thus you can see the difficulty the importer faces. So the importer has to decide what is the value of this import and then at what rate is the duty applied. And that's what the importer owes customs to import the duty. Now, the duty is payable by the importer at the time of importation. So having the first sale as a practice that is accepted by CBP and which is used for many situations of imported goods is at least something that you can rely on, something that is relatively easy to know at the time of importation. And therefore you have a consistent way of. As an importer, you're doing the same thing with every shipment that you are importing. And that consistency has value in terms of the predictability of the tax and the predictability of the importation itself. So there's lots of things that are good about having a rule, whatever that rule is. And once again, first sale is just practice. It's. It's a way to do it. It's not the only way. If you do your own income tax with TurboTax or something like that, there are many ways to get to the final result. Right. And that's true of, of any kind of situation like this. So that assessed value or, or declared value at the time of importation first sale is just a practice that has been used by customs for the most part. What Senator Cassidy and Whitehouse are proposing is a move to last sale, which takes it further down and basically increases the value of the good. So it collects supposedly more tariff revenue. I question whether that's the case because it is possible to conceive of situations where the last sale is actually lower than the first sale. Sometimes the first sale is the last sale. So a good that's delivered straight to the manufacturer. This happens a lot in the chemical business where you. Your quotation from the supplier is total delivered cost of the good. So the importer is basically delivering it fob your plant and you process it into something else. So their first sale is last sale. But I think that there's a lot of room for wiggling in this in. And I would note that by inflating or raising the cost of duties on a unimported good, you're actually Raising the cost of goods sold, which lowers the ultimate revenue that's taxable from the retailer itself. So I don't know, they probably ought to have this bill scored. They probably ought to talk to some people in the business. This thing needs work.

[B]

Well, let me go back a step here because we haven't really explained what, what it is exactly. If the foreign manufacturer is selling directly to Walmart, for example, there's only one sale and one transaction. And this is not an issue.

[A]

Right.

[B]

The problem arises or the opportunity arises when there's a middleman. So the foreign manufacturer sells to a middleman who then resells to whoever in the United States is going to use the merchant but buy the merchandise and either consume it or resell it. So the first sale is the sale from the foreign party, in this case to the middleman. The last sale is basically after the middleman adds his cut. So it's the sale from the middleman to the domestic retailer for the most part.

[C]

So it's the retailer, not the consumer.

[B]

Well, it's whoever is buying the product. In this case, the retailer would be the store that's going to sell it or it would be the company that's going to make it into something else.

[C]

Yeah.

[B]

So in an example which is shamelessly stolen from Ted Murphy at Sidley Austin, who is a guru on all this stuff and has a little newsletter if people are want to get into the weeds on this stuff. Ted's example is you have a $100 widget and you're a foreign manufacturer. You sell your widget to your middleman for $100. The tariff on that, if that's the first sale, the. Let's say there's a 20% tariff because Scott's right. It all depends on the percentage 20% tariff. So it would be $20. Okay. So the middleman, however, takes his cut. He resells the item to the end user in the United States for $130. So that is the last sale. If you base the tariff on the last sale, the tariff, the 20%, is $26, not $20. So from the retailer's perspective, and he'll probably have this because it's gonna get passed on to him, he's now paying $6 more than he's paying. If you calculate on the basis of first sale. Now, the law, there actually is a lot of legal detail about this and there's case law. Back it up. It's not a matter of whim. The law provides for last sale, but it allows for certain. Define circumstances in which first sale might be an item might be eligible for sale. And if you meet those criteria, then you can read this in Ted's note or you can actually read it in the law because it's spelled out in the statute. If you meet the criteria, then you can apply first sale in your calculations and save money. The bill is designed to eliminate what Senator Cassidy referred to as a loophole. They view first sale because this would produce a lower tariff as a loophole and it would basically force everybody to do last sale. The Customs Service has supported doing that anyway in the past. They tried to get Congress to approve that in 2008, and Congress wouldn't go along with it because there was a lot of lobbying from the retailers not to do that because it would cost them more. So the loophole remains. I don't have a fixed view on which is better. I mean, I know which is going to save people money, at least at the front end, which is first sale is cheaper. What the right answer is, I don't know. And I think from Customs point of view, what is best for them is to have one standard because that makes administration much simpler and you don't have to go through the complicated process of figuring out is this eligible for her sale or not and, you know, go through all that extra paperwork. Let's just have one system for everybody.

[C]

As the administration weighed in on this at all, I haven't seen anything on if they have a position on the legislation or not.

[B]

Not yet. I was only introduced this week, I think. So I don't think there's been time. I mean, if CBP has anything to say about it, they'll support it.

[A]

They've supported in the past, that's for sure.

[B]

Yeah. Yeah. Okay. All right.

[C]

We're going to keep an eye on it. And then finally today, let's take a look at the US Taiwan Trade Agreement signed earlier this month. The deal, which was announced in January, will result in tariffs on Taiwanese goods being lowered from 20% to 15% in exchange for a $250 billion investment in the US chip industry, while Taiwan will remove or reduce 99% of its tariff barriers. Scott, what are your takeaways here and who are the industries that we can consider winners and losers?

[A]

Well, the first thing I would note is this is progress. After a long time of sitting around talking, there was a thing called the U.S. taiwan Trade and Investment Framework Agreement that was basically a place to air differences and to get to the place where they could agree on a market opening agreement, which this one is that TIFA or Trade Investment Framework Agreement began its first meeting in 1994 and they've been talking ever since. So that's a lot of talking even for old guys like Bill and I. That's, this is Bill Clinton's first term was when this was launched. So many great hopes and not much happened over that 30 year period. But now there's agreement, so that's good. The market opening that is advertised is useful and important. Although I think what the real story is here is investment. I think the, the key to Taiwan's future as a supplier of high tech products particularly they run the world's best foundries in IT chip manufacturing. So they're the state of the art. But building those state of the art facilities in places like Phoenix, Arizona instead of additional facilities in Taiwan I think is at aid to our security and their security. And so I think that's the big story here. I'm glad to see the opening for market access for imported products particularly the AG guys look like they made some headway which is great. And there's a number of other specific elements that, that are called out. We'll, we'll see how it gets implemented. Full marks from a USDR standpoint on this after a lot of years of talking and not much headway.

[B]

Well, yeah, I just dick in my all usual caveat of, you know, let's not count our chickens before they hatch.

[A]

Great.

[B]

The Taiwanese promise to eliminate or reduce 99% of their tariffs. The words or reduce could end up being very different from eliminate. We'll have to see. They've pledged to open up, get rid of a lot of NTBs. This is all good. They've pledged to buy a bunch of stuff. 44 billion of LNG in oil, 15 billion in aircraft, 25 billion in power generation equipment. This is all good if it happens. And remember of course what we're learning already with respect to other agreements is these things end up, everybody ends up going back to the table either because you know, we're angry because the other guys are not moving fast enough or because we found something else we want or they're coming back trying to get some additional concession on their part. So I mean this is good, but it's not the last word on Taiwan case. But Scott makes an important point which is that the core of it I think is the 250 billion promised in direct investment in the US in the semiconductor sector. Plus apparently also 250 billion in loan guarantees with preferential treatment and some tariff free chip shipment allowances as U.S. capacity ramps up. It remains to be seen exactly what that will mean. But there's an underlying security question here that Taiwan wrestles with, and it's probably certainly beyond my capacity to answer the question, but is their security better protected if they maintain the core of their semiconductor manufacturing in Taiwan, or is it better protected if they move it to the United States? The United States no doubt, would like to say move all of it here, because that's good for us, and it is good for us. It's good for us in terms of jobs, it's good for us in terms of security. It's good for us in terms of creating a domestic manufacturing capability. We've lost the Taiwanese problem is, if they move it all here, why would the United States care about defending Taiwan in the future if it's attacked? And so I think one of the issues that Taiwan has to consider is maybe we want to keep the core of it here in Taiwan, because if we keep the core of it here in Taiwan, then we're important and defending U.S. matters.

[A]

Well, $250 billion would not move at all. To be clear, it would take a lot more than $250 billion to move all the industry from Taiwan to the United States.

[B]

But the question really is, I think, where is the IP and where is the high end? Yes, and all signs seem to indicate that they want to keep it in Taiwan. But that's sort of the dilemma that comes out in this larger debate here. There's a tension, I think, between the United States wanting to have as much here as it possibly can, and the Taiwanese wanting to retain as much as they can because they think it's essential to their ultimately, to their security to have the base of their capability in Taiwan.

[C]

Yeah, I mean, we're going to be talking about this a lot as the Trump Xi meeting comes into greater focus in early April. I mean, the Wall Street Journal had a big report just out about a US Arms sale to Taiwan, you know, being now in jeopardy because, you know, could derail Trump's trip to Beijing a month and a half from now. So I think it's gonna be a topic we talk about quite a bit, but that's a fair question. Scott and Bill. All right, guys, we're gonna leave it there for today. As always, I feel like a broken record here, but we will be with our audience. Should the Supreme Court finally make its decision. It's possible that we have an episode out before you listen to this one. If the decision comes down on Friday the 20th, which as a recording time is tomorrow. So we'll be with you as soon as the Supreme Court makes a decision, and we'll be with you then. But until then, take care, everybody.

[A]

Thank you.

[C]

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