Washington (United States) (AFP) – The United States said Thursday that 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.
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.
Taiwanese producers who invest in the United States will also be treated more favorably when it comes to future semiconductor duties, the Commerce Department said. Firms building new US chip capacity may import up to 2.5 times their planned capacity without paying sector-specific duties during construction. The quota lowers to 1.5 times once projects are completed.
A day prior, US officials held off imposing wider chip tariffs, instead announcing a 25 percent duty on certain semiconductors meant to be shipped abroad — a key step in allowing Nvidia to sell advanced AI chips to China. Ryan Majerus, a former US trade official, told AFP that although chip tariffs are currently narrowly targeted, Washington “signaled there is certainly potential for it to grow.” Majerus, now a partner at law firm King & Spalding, added that the deal had parallels to those with other US partners. The European Union and Japan, for example, both also secured a 15-percent tariff rate.
“The objective is to bring 40 percent of Taiwan’s entire supply chain and production, to domestically bring it into America,” Lutnick told CNBC. “We’re going to bring it all over, so we become self-sufficient in the capacity of building semiconductors,” he added. The agreement comes after months of negotiations. Taiwanese President Lai Ching-te had pledged to boost investments in the United States and increase defense spending as his government tried to lower US duties and avoid a toll on its semiconductor chip exports.
Taiwan is a powerhouse in the manufacturing of semiconductor chips, which are the lifeblood of the global economy, as well as other electronics. But US President Donald Trump previously accused Taiwan of stealing the US chip industry, and his administration had made clear it wants more of the critical technology made on American soil. Taiwan’s trade surplus in goods with the United States was around $74 billion in 2024. More than half of its exports to the United States are information and communications technology products — including semiconductors.
© 2024 AFP
