The United States and Taiwan have finalized a trade agreement that will lower tariffs on Taiwanese goods in exchange for substantial Taiwanese investment in the American semiconductor sector. The deal aims to increase chip manufacturing within the US, a move the US Commerce Department stated “will drive a massive reshoring of America’s semiconductor sector.”
Under the terms of the agreement, Washington will reduce tariffs on Taiwanese products from 20 percent to 15 percent. In return, Taiwanese technology firms are set to make direct investments of at least $250 billion to expand semiconductor and AI-related production capacity in the United States. Taiwan will also offer $250 billion in credit guarantees to facilitate further investment by its enterprises.
Taiwanese Premier Cho Jung-tai praised the outcome of the negotiations, stating his team “delivered a well-executed home run.” However, the agreement has drawn criticism from both mainland China and Taiwan’s opposition party. China’s foreign ministry expressed that it “resolutely opposes” the deal.
Within Taiwan, the opposition Kuomintang party, which controls the parliament where the deal must be approved, raised concerns. Party chairperson Cheng Li-wun warned that increasing Taiwanese investment in US chip production could lead to the “hollowing out” of the island’s own economy.
Taiwanese officials sought to address these concerns. Economic Affairs Minister Kung Ming-hsin assured that Taiwan would remain the world’s leading producer of AI semiconductors. He projected that by 2030, advanced chip production capacity would be split approximately 85-15 between Taiwan and the United States.
The agreement has significant implications for Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker. In a statement, TSMC said it welcomed “the prospect of robust trade agreements between the United States and Taiwan,” adding that “strengthened trade relations are essential for advancing future technologies and ensuring a resilient semiconductor supply chain.”
US Commerce Secretary Howard Lutnick noted that TSMC has already acquired additional land for potential expansion in Arizona as part of the deal.
