WASHINGTON – The United States said on Jan 15 that it has signed a deal with Taiwan to reduce tariffs on goods from the democratic island, while increasing Taiwanese semiconductor and tech companies’ investments in America.
The agreement, the US Commerce Department said, “will drive a massive reshoring of America’s semiconductor sector”.
Under the deal, Washington will lower tariffs on Taiwanese goods to 15 per cent, down from a 20 per cent “reciprocal” rate meant to address US trade deficits and practices it deems unfair.
Sector-specific tariffs on Taiwanese auto parts, timber, lumber and wood products will also be capped at 15 per cent, the US Commerce Department said.
Meanwhile, Taiwanese chip and tech businesses are set to make “new, direct investments totalling at least US$250 billion (S$322 billion)” in the United States to build and expand capacity in areas like advanced semiconductors and artificial intelligence.
Taiwan will also provide “credit guarantees of at least US$250 billion to facilitate additional investment by Taiwanese enterprises”, into the American semiconductor supply chain, the Commerce Department added.
The department’s announcement did not mention names, but the deal has key implications for Taiwanese chipmaking titan TSMC, the world’s biggest contract maker of microchips used in everything from Apple phones to Nvidia’s cutting-edge AI hardware.
In an interview with CNBC, Commerce Secretary Howard Lutnick said TSMC has bought land and could expand in Arizona as part of the deal.
“They just bought hundreds of acres adjacent to their property. Now I’m going to let them go through it with their board and give them time,” he said.
Taiwanese firms building new US chip operations will also be treated more favourably when it comes to future duties on semiconductors, the Commerce Department added on Jan 15.
Firms building new US chip capacity may import up to 2.5 times their planned capacity without paying sector-specific duties during construction. The quota lowers to 1.5 times once projects are completed.
A day prior, US officials held off imposing wider chip tariffs, instead announcing a 25 per cent duty on certain semiconductors meant to be shipped abroad – a key step in allowing Nvidia to sell advanced AI chips to China.
Mr Ryan Majerus, a former US trade official, told AFP that although chip tariffs are currently narrowly targeted, Washington “signalled there is certainly potential for it to grow”.
Mr Majerus, now a partner at law firm King & Spalding, added that the deal had parallels to those with other US partners. The European Union and Japan, for example, both also secured a 15-per cent tariff rate.
“The objective is to bring 40 per cent of Taiwan’s entire supply chain and production, to domestically bring it into America,” Mr Lutnick said.
“We’re going to bring it all over, so we become self-sufficient in the capacity of building semiconductors,” he added.
The agreement comes after months of negotiations.
Taiwanese President Lai Ching-te had pledged to boost investments in the United States and increase defense spending as his government tried to lower US duties, and avoid a toll on its semiconductor chip exports.
Taiwan is a powerhouse in the manufacturing of semiconductor chips, which are the lifeblood of the global economy, as well as other electronics.
But Mr Trump previously accused Taiwan of stealing the US chip industry, and his administration had made clear it wants more of the critical technology made on American soil.
Taiwan’s trade surplus in goods with the United States was around US$74 billion in 2024. More than half of its exports to US are information and communications technology products – including semiconductors. AFP
