The deal strengthens US ties with Taipei as China increases pressure on the island and Washington seeks to avoid a trade war.
The United States and Taiwan clinched a trade deal cutting tariffs on many Taiwanese exports and paving the way for major new investments in the US technology sector in a move likely to anger China.
The agreement strengthens ties between Washington and Taipei at a sensitive moment as China steps up pressure on the island which it claims as its own while the US seeks to avoid a wider trade conflict with Beijing. Central to the deal are semiconductors where Taiwan plays a dominant global role.
Under the agreement Taiwanese chipmakers expanding production in the US will face lower tariffs on semiconductors and related equipment imported into the country with some products entering duty free. Broad tariffs on most other Taiwanese exports to the US will fall to 15 percent from 20 percent. Certain goods including generic pharmaceuticals, aircraft components and unavailable natural resources will face zero tariffs.
In return Taiwanese companies will invest 250 billion dollars in the US across semiconductors energy and artificial intelligence. This includes 100 billion dollars already pledged by TSMC in 2025 with further commitments expected. Taiwan will also guarantee an additional 250 billion dollars in credit to support future investment.
US Commerce Secretary Howard Lutnick said the aim was to bring 40 percent of Taiwan’s chip supply chain and production to the US warning tariffs could rise sharply for firms that do not build locally.
The deal is expected to benefit major chip equipment suppliers such as ASML Lam Research and Applied Materials as well as smaller materials firms. Shares in several semiconductor companies rose following the announcement.
Washington increasingly views access to computer chips as a national security priority as demand grows across consumer technology, artificial intelligence and defence.
