The United States and Taiwan signed a trade and investment agreement recently, as reported on a fact sheet released by the U.S. Commerce Department’s Office of Public Affairs. The deal links trade terms with long term investment tied to semiconductor production and related technology activity inside the United States.
Under the agreement, Taiwanese semiconductor and technology companies will put at least $250 billion into new and existing production sites in the United States. The Commerce Department said this spending will support advanced chip making, energy projects and artificial intelligence related work.
Taiwan also agreed to back at least $250 billion in credit guarantees. These guarantees will help Taiwanese businesses fund further activity across the chip supply chain in the United States, according to the Commerce Department.
How Will Tariffs And Trade Terms Work?
The agreement sets out tariff limits for goods traded between the two economies. The U.S. reciprocal tariff on Taiwanese goods will total no more than 15%, down from a base rate of 20%, according to the Commerce Department announcement made yesterday.
Section 232 duties on Taiwanese auto parts, timber, lumber and wood products will also stay at or below 15%. The Commerce Department said this offers more certainty for exporters in these areas.
Generic pharmaceuticals, their ingredients, aircraft components and unavailable natural resources will enter the United States at a 0% reciprocal tariff rate. Most high tech exports from Taiwan already enter the U.S. without tariffs, the department added.
Different rules apply to semiconductors. Taiwanese companies building new chip capacity in the United States may import up to 2.5 times their planned output during construction without paying Section 232 duties. After new facilities begin production, firms may import 1.5 times their U.S. output without those duties.
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Why Does Semiconductor Production Attract So Much Attention?
Semiconductors are involved somewhere in practically all modern tech products… This has led policymakers to focus more on where chips are made and how supply chains operate.
The Commerce Department said the U.S. share of global wafer fabrication went down from 37% in 1990 to less than 10% in 2024. Production moved mainly to East Asia over that period, driven by overseas industrial policies and cost structures.
One goal of the agreement is to increase chip production inside the United States through new factories and industrial parks. The Commerce Department said the two sides will support the creation of industrial parks designed for next generation technology and advanced manufacturing.
Taiwan Semiconductor Manufacturing Company has already committed $100 billion to U.S. projects during the current administration. Commerce Secretary Howard Lutnick said this amount will count toward the $250 billion total pledged by Taiwanese companies.
Taiwanese officials said the agreement does not mean chip production will leave the island on a large scale. Economic Affairs Minister Kung Ming hsin told reporters that Taiwan will continue as the world’s most important producer of AI semiconductors.
The agreement also opens doors for U.S. companies to invest more freely in Taiwan’s semiconductor, AI, defence technology, telecommunications and biotechnology fields. The Commerce Department said this element is designed to improve market access for American businesses and support technology links between the two economies.
