Taiwan–US Reach Trade Agreement to Cut Tariffs and Expand Semiconductor Investment

Taiwan and the United States have finalized a new trade agreement under which Taiwan will significantly expand its investments in American technology and energy sectors in return for reduced import duties.

According to a statement released by the US Commerce Department on Thursday, Taiwanese semiconductor and technology firms have committed a minimum of $250 billion in investments across the United States. As part of the agreement, Washington will lower its standard tariff rate on Taiwanese imports from 20% to 15%.

The agreement reflects Washington’s broader strategy to secure stronger access to Taiwan’s semiconductor ecosystem. Taiwan plays a central role in the global supply of advanced chips that power modern digital technologies, making it a vital pillar of the world economy. At the same time, the island continues to face sovereignty claims from China, adding geopolitical weight to the deal.

Last spring, President Donald Trump imposed a 32 percent tariff on Taiwanese imports under his wide-ranging “Liberation Day” trade measures, a rate that was later reduced to 20 percent.

The US Commerce Department described the new agreement as “historic,” stating that it is expected to enhance economic resilience, generate high-quality jobs, and reinforce national security interests.

Beyond the pledged $250 billion for expanding advanced semiconductor manufacturing, energy projects, and artificial intelligence innovation in the United States, Taiwan has also committed to providing an equivalent amount in credit guarantees. These guarantees are intended to support further investment by Taiwanese companies throughout the US semiconductor supply chain.

Taiwan’s Semiconductor Leverage

Taiwan has underscored that the new agreement will not weaken its position as the world’s leading semiconductor producer. Officials emphasized that the island will continue to play a central role in global chip manufacturing, particularly in advanced and artificial intelligence–focused semiconductors.

For decades, Taiwan’s chip sector has been viewed as a strategic deterrent against potential military pressure from China, which claims sovereignty over the island. This dominance has also been a key factor in sustaining strong US security and economic ties with Taipei.

Speaking to reporters on Friday, Economic Affairs Minister Kung Ming-hsin said Taiwan is expected to remain the most important global source of AI semiconductors, serving not only domestic firms but the wider international market, according to AFP.

Beijing responded sharply to the deal, reiterating its opposition to agreements involving Taiwan and countries that maintain diplomatic relations with China. A spokesperson for China’s Ministry of Foreign Affairs urged Washington to adhere to the one-China principle.

Kung added that manufacturing capacity for advanced AI chips is projected to be shared increasingly with the United States over time, with Taiwan retaining roughly 85 percent of production by 2030 and about 80 percent by 2036.