U.S. and Taiwan Forge Agreement to Slash Tariffs and Increase Chip Sector Investment

The United States and Taiwan have struck a groundbreaking agreement that will reduce tariffs on Taiwanese imports, capping them at 15%. This arrangement will also significantly enhance financing for Taiwanese involvement in U.S. semiconductor ventures, with funding surging to half a trillion dollars, as announced by officials in the Trump administration on Thursday.

This new tariff rate represents a modest decrease from the previous 20% standard tied to the 'reciprocal tariffs' policy initiated by President Trump for many goods imported from Taiwan. On Thursday, the Department of Commerce detailed the arrangement, highlighting that Taiwanese semiconductor and technology firms will undertake fresh investments in the United States, amounting to no less than $250 billion. These investments will support advancements in energy, artificial intelligence, and technological innovation within the U.S., while Taiwan plans to extend credit assurances of at least another $250 billion to broaden the semiconductor supply chain stateside. The Trump administration emphasizes the essential role of semiconductor chips in future technological progress and the geopolitical competition with China.

Commerce Secretary Howard Lutnick, who leads the Department, did not disclose which specific companies are poised to invest in America. However, Taiwan is known for dominating the global production of semiconductor chips, particularly in the advanced category. Among Taiwanese companies, Taiwan Semiconductor Manufacturing Company (TSMC) stands out as the leading semiconductor producer globally, far surpassing its rivals.

Through this deal, Taiwanese firms initiating new chip manufacturing operations within the U.S. will benefit from waived tariffs on selected imports. Notably, generic pharmaceuticals, components for aircraft, and certain scarce natural resources will not attract U.S. tariffs, as per Department of Commerce statements.

The announcement of this agreement was strategically timed ahead of a Supreme Court review concerning the president's authority to independently impose tariffs on imports from other nations.