In a landmark trade agreement, the United States has negotiated a significant reduction of tariffs on Taiwanese goods from 20% to 15%, reciprocated by substantial investment commitments exceeding $250 billion aimed at bolstering domestic semiconductor production. The Commerce Department announced that Taiwanese semiconductor and technology firms have pledged new direct investments totaling at least $250 billion, with additional carve-outs from tariffs for companies investing in US operations.
This strategic move addresses critical supply chain vulnerabilities exposed during the COVID-19 pandemic, when semiconductor shortages disrupted multiple industries from automotive to consumer electronics. Commerce Secretary Howard Lutnick emphasized in a CNBC interview that the agreement advances US objectives toward semiconductor self-sufficiency, stating, “We’re going to bring it all over.”
The agreement builds upon previous US government initiatives that allocated hundreds of billions in subsidies to strengthen the semiconductor sector. Taiwanese manufacturing giant TSMC, which dominates the global semiconductor industry, has accelerated its US investments, including a recently operational Arizona facility producing chips for major American tech companies including Nvidia, Apple, and AMD. This facility received $40 billion in government subsidies during the Biden administration.
Beyond direct corporate investments, the Taiwanese government will provide $250 billion in financing to support companies participating in this initiative. The new 15% tariff rate aligns with rates applied to other key US trade partners including Japan, South Korea, and the European Union, established through agreements stemming from tariffs initially announced by the Trump administration last April.
The agreement emerges amid ongoing legal challenges to these tariffs, with the Supreme Court currently considering claims from US businesses and states that the duties represent an overreach of presidential power. The Trump administration had previously threatened broader semiconductor tariffs citing national security concerns, though these were postponed following alarm from US firms dependent on imports.
This development occurs alongside struggles at Intel, TSMC’s American rival, which has faced challenges in advancing AI chip manufacturing despite a surprising 10% government stake acquisition last year. Recent industry data reveals that semiconductor manufacturing eliminated over 17,000 jobs last year, contrasting with government efforts to stimulate sector growth.