WASHINGTON, DC – The United States said Thursday(Friday, Manila time) 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 percent, down from a 20 percent “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 percent, while generic pharmaceuticals and certain natural resources will face no “reciprocal” duties, the Commerce Department added.
Meanwhile, Taiwanese chip and tech businesses are set to make “new, direct investments totaling at least $250 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 $250 billion to facilitate additional investment by Taiwanese enterprises,” to support the growth of the US semiconductor supply chain, the department said.
Taiwan’s government said the new tariff will not stack on top of existing duties, which had been a major concern for local industries.
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.
