Washington.– The United States and Taiwan reached a trade agreement whereby the island’s semiconductor giants commit to invest $250 billion in the North American country and Washington will limit its tariffs on that economy to 15%.
According to a statement from the Department of Commerce, the agreement, described as “historic,” establishes that the U.S. will impose a reciprocal zero percent tariff on generic pharmaceuticals and their ingredients, aircraft components, and certain natural resources not available in the country.
As part of the agreement, industrial parks will be established in the United States to strengthen its infrastructure and position it as a “global hub” for next-generation technology, advanced manufacturing, and innovation.
Taiwan, for its part, will facilitate US investment in its semiconductor, artificial intelligence, defense technology, telecommunications, and biotechnology sectors, with the aim of expanding market access for US companies, deepening technological collaboration, and strengthening US leadership in critical and emerging industries, according to the Department of Commerce.
Chips at the Center of the US-Taiwan Agreement
The parties also agreed that future tariffs under the Section 232 framework will include some exceptions for companies that manufacture chips in the United States.
According to the agreement, Taiwanese companies will be able to import up to 2.5 times their production capacity without paying Section 232 duties during the approved period, and once the factories are completed they will be able to import up to 1.5 times their capacity.
Also, auto parts, wood and related products from Taiwan will not be subject to duties exceeding 15%.
By the way, U.S. Commerce Secretary Howard Lutnick told CNBC on Thursday that Taiwan Semiconductor Manufacturing Company (TSMC) has purchased land in the U.S. and could expand its operations in Arizona as part of the deal.
“They just bought hundreds of acres adjacent to your property. I will let them proceed with their meeting and give them time,” Lutnick indicated.
Benefit of Manufacturing in the Country
The official added that Taiwanese-based chip companies that do not manufacture in the United States will likely face a 100% tariff, and that the purpose of Donald Trump’s Government is to move 40% of the Taiwanese semiconductor supply chain to the North American country.
According to the statement, semiconductors are vital to the industrial, technological, and military strength of the United States, but for a long time the country relied on foreign manufacturers and fragile global supply chains.
The Trump administration has pledged to reverse this trend, but experts warn that replicating Taiwan’s manufacturing capacity — an island that China claims — will not be easy, given that it has decades of experience, a highly specialized workforce, and a complete ecosystem of suppliers and logistics that allows it to maintain high levels of efficiency.
