US Imposes Tariffs on Iran Amid Protests While Finalizing Taiwan Trade Deal

On Monday, January 12, 2026, President Donald Trump enacted an immediate 25% tariff targeting any nation engaged in commerce with the Islamic Republic of Iran. This unilateral economic measure was announced as the United States monitored escalating anti-government demonstrations within Iran, with the President asserting the order was "final and conclusive" and immediately increasing costs for American importers from the affected jurisdictions. The protests, which began in late December 2025 in Tehran's bazaar over economic hardship, have broadened into significant challenges to the clerical establishment.

Human rights organizations have documented the severe crackdown; Iran Human Rights (IHRNGO) reported on January 12 that at least 648 protesters had been killed, with over 10,000 arrests recorded across 186 cities in all 31 provinces. China's embassy in Washington formally criticized the action, stating opposition to "illicit unilateral sanctions" and issuing a warning that "tariff wars and trade wars have no winners." The administration has maintained that diplomatic engagement remains the primary response to the situation in Iran, although military considerations have not been entirely dismissed by the White House.

This new trade maneuver occurs while the U.S. Supreme Court is actively reviewing the legality of previous, sweeping tariffs the Trump administration implemented under the 1977 International Emergency Economic Powers Act (IEEPA). Economists have projected that adding these new levies to existing duties could inflict a "meaningful shock" upon the American economy. The Supreme Court’s review of IEEPA tariffs, which have generated billions in revenue, centers on whether Congress improperly delegated its constitutional authority to regulate tariffs to the President. The Department of Justice has indicated that if the Court invalidates the IEEPA tariffs, refunds would be made available for all duties instituted under that statute, including those recently imposed on India and Brazil.

In a parallel development, Taiwan announced on Tuesday, January 13, 2026, that it had reached a "general consensus" with the United States regarding a comprehensive trade agreement. Negotiations for this accord commenced in April 2025 following President Trump's initial imposition of a 32% tariff on Taiwanese exports, a rate subsequently reduced to 20%. The nearly finalized agreement stipulates a reduction of U.S. tariffs on Taiwanese imports from 20% down to 15%, aligning Taiwan’s import rates with those currently applied to Japan and South Korea.

Taiwanese President Lai Ching-te has committed to bolstering U.S. investment and increasing defense expenditures to secure these favorable terms, proposing a supplementary budget of US$40 billion over eight years to bring defense spending to 3.3% of GDP in 2026. Central to this trade resolution is Taiwan Semiconductor Manufacturing Company (TSMC), the world's foremost producer of advanced chips essential for artificial intelligence applications. TSMC has pledged to construct a minimum of five additional semiconductor fabrication plants in Arizona, augmenting the six factories and two advanced packaging facilities already committed to opening there. This commitment could escalate TSMC’s total U.S. investment to exceed US$300 billion, with the cost of each new fab potentially surpassing US$20 billion.

Taiwan’s stated objective in the negotiations was to secure "reciprocal tariff reductions without stacking tariffs" and to obtain preferential classification for its semiconductors under Section 232 provisions. Both Washington and Taipei are currently coordinating the schedule for a final meeting, which is anticipated to occur before the conclusion of January 2026, to formalize the agreement.