The United States and Taiwan have finally finalized a key trade agreement, which not only reduces Taiwan’s tariffs on goods exported to the US to 15% but also drives up to $500 billion in semiconductor investments flowing into the US.
(Background: US imposes 20% tariff on Taiwan — do you know how much Taiwan tariffs US products? It might not be as low as you think.)
(Additional background: Taiwan’s collective concern over semiconductor tariffs: What is the US “Section 232”?)

Table of Contents

• Semiconductors as the core, with investment and financial support advancing together
• Tariff buffer mechanisms to reduce industry uncertainty
• Geopolitical and economic dual implications

According to the latest report from Bloomberg, the US and Taiwan have officially reached a long-anticipated major trade agreement. Both sides agree to lower tariffs on Taiwanese goods exported to the US to 15%, while significantly expanding Taiwanese semiconductor industry investments in the US, totaling up to $500 billion.

Under the agreement, the US will reduce the previously imposed 20% tariff on Taiwanese goods to 15%, aligning with major technology export countries like Japan and South Korea, which have already negotiated with the US. This adjustment helps enhance the competitiveness of Taiwanese products in the US market, especially in high-value-added technology and manufacturing sectors.

Semiconductors as the core, with investment and financial support advancing together

The core of this agreement focuses on the semiconductor industry. Taiwan’s tech industry commits to investing at least $250 billion to expand its advanced semiconductor, AI, and energy-related businesses in the US; simultaneously, Taiwan will provide $250 billion in credit guarantees to further support long-term investments and expansion of the US semiconductor supply chain.

Although the White House’s published agreement document does not explicitly mention TSMC, the market generally believes that as the world’s largest and a key supplier of AI chips, TSMC will play a crucial role. The related arrangements are expected to accelerate the transfer of Taiwan’s semiconductor capacity to the US, strengthening domestic manufacturing capabilities.

Tariff buffer mechanisms to reduce industry uncertainty

Regarding semiconductor tariffs, the agreement also includes flexible buffer mechanisms. Taiwanese companies building new production lines in the US can import products equivalent to 2.5 times their current capacity tariff-free during construction; after the factory officially begins operation, the tariff-free limit is reduced to 1.5 times. This is seen as a compromise between national security considerations and industry practicality, reducing investment uncertainty for companies.

Additionally, the agreement stipulates that US tariffs on Taiwanese automotive parts, wood, and related derivatives are capped at 15%; general generic medicines manufactured in Taiwan can be imported tariff-free.

Geopolitical and economic dual implications

Analysts point out that this agreement is not only an economic and trade arrangement but also carries significant geopolitical implications. Taiwan is an important partner for the US in the Asia-Pacific region, and semiconductors are viewed as a strategic industry related to national security. By lowering tariffs and guiding investments, the US can accelerate its “reindustrialization” and localization of chip manufacturing goals. Meanwhile, Taiwan can stabilize exports to the US and industry layout while diversifying supply chain risks.

For Taiwan’s economy, the agreement helps eliminate some external uncertainties. Driven by AI and high-performance computing demands in recent years, Taiwan’s tech exports have continued to grow, with impressive economic performance. This US-Taiwan trade agreement is seen as providing longer-term, institutionalized support for this growth momentum.