Key Points
- The U.S. and Taiwan have signed a major trade deal focused on semiconductors and investment.
- The U.S. will lower tariffs on Taiwanese exports, including chips. In return, Taiwanese tech companies will invest at least $250 billion in the U.S.
- The deal is a major boost for the U.S. domestic chip supply chain.
- The agreement deepens the ties between Washington and Taipei amid rising tensions with China.
The United States and Taiwan have signed a major trade deal that will cut tariffs on Taiwanese exports and bring a massive wave of new investment into the U.S. technology sector. The agreement, announced on Thursday, deepens ties between Washington and Taipei at a time when China is intensifying pressure on the island.
Under the deal, the U.S. will lower its broad tariffs on most Taiwanese exports from 20% to 15%. More importantly, Taiwanese chipmakers like TSMC that expand their production in the U.S. will get a lower tax rate on the semiconductors they import.
In return, Taiwanese tech companies have committed to investing at least $250 billion in the United States to boost production in the semiconductor, energy, and artificial intelligence sectors. This includes the $100 billion TSMC had already committed to in 2025. Taiwan will also provide an additional $250 billion in credit to enable further investment.
This is a huge win for the U.S. as it tries to build a more resilient domestic chip supply chain. The new investment will likely be a boon for TSMC’s major suppliers, many of whom have already been expanding their operations in Arizona to support Intel and are now expanding to support TSMC’s new facilities.
TSMC, for its part, is already speeding up its expansion plans. The company’s CEO said on Thursday that they are applying for permits to build a fourth factory and an advanced packaging plant in Arizona.
The deal is a clear signal of the Trump administration’s commitment to supporting Taiwan and countering China’s growing influence. However, it also carries some uncertainty, as the U.S. Supreme Court is expected to rule soon on the legality of the President’s broad use of tariffs.
