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US and Taiwan strike landmark trade agreement
The United States has agreed to reduce tariffs on Taiwanese goods to 15% in exchange for commitments totaling at least $250 billion (£187 billion) in semiconductor and technology investments, the Commerce Department announced on Friday.
Investment commitments and tariff relief
Under the deal, Taiwanese semiconductor firms will receive exemptions from tariffs when investing in the U.S. The agreement aims to bolster domestic chip production, a priority for Washington since pandemic-induced shortages exposed vulnerabilities in global supply chains.
Commerce Secretary Howard Lutnick told CNBC the pact would help the U.S. achieve "self-sufficiency" in semiconductor manufacturing. "We're going to bring it all over," he said, referring to the relocation of production capacity.
TSMC accelerates U.S. expansion
Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest chipmaker, is accelerating its U.S. investments. The firm, which opened a plant in Arizona in 2024 with $40 billion in federal subsidies, produces chips for major tech companies including Nvidia, Apple, and AMD.
Lutnick suggested the new trade deal could prompt further expansion by TSMC and encourage smaller suppliers to relocate to the U.S., strengthening the domestic supply chain.
Taiwanese government backs investment push
The Taiwanese government will provide $250 billion in financing to support firms investing in the U.S., according to the Commerce Department. The island, which China claims as its territory, had sought tariff reductions under the previous U.S. administration but resisted demands to transfer sensitive technology.
Tariff reduction aligns with global trade partners
The new 15% tariff rate matches those applied to goods from Japan, South Korea, and the European Union, which were negotiated following tariffs imposed by former President Donald Trump in April 2025. Trump argued the measures addressed trade imbalances, but U.S. businesses and states have challenged them in court, claiming an overreach of presidential authority.
The Supreme Court is currently reviewing the legality of those tariffs. Meanwhile, the Trump administration had previously threatened broader semiconductor tariffs on national security grounds but delayed implementation amid opposition from U.S. firms reliant on imports.
Industry challenges persist despite government support
The semiconductor sector faced significant job losses last year, shedding over 17,000 positions despite federal efforts to stimulate growth. Intel, a key U.S. chipmaker and TSMC rival, has struggled to compete in advanced chip production for artificial intelligence applications.
In a surprise move last year, the U.S. government acquired a 10% stake in Intel, but the company plans further layoffs in addition to recent job cuts.
