The United States and Taiwan have entered a trade deal that aimed at reducing tariffs on the Island’s shipments and boost investments.
Taiwan is a powerhouse in producing chips — a critical component in the global economy — but the United States wants more of the technology made in America.
The agreement “will drive a massive reshoring of America’s semiconductor sector,” the US Commerce Department said.
Under the deal, Washington will lower tariffs on Taiwanese goods to 15 per cent, down from a 20 per cent “reciprocal” rate meant to address US trade deficits.
Taiwanese Premier Cho Jung-tai hailed the negotiators move, adding that, the deal “delivers a well-executed home run” following months of talks.
“These results underscored that the progress achieved so far has been hard-won,” Cho said.
Taiwan’s dominance of the chip industry has long been seen as a “silicon shield” protecting it from an invasion or blockade by China — which claims the island is part of its sovereign territory — and an incentive for the United States to defend it.
But the threat of a Chinese attack has fuelled concerns about potential disruptions to global supply chains, increasing pressure for more chip production beyond Taiwan’s shores.
“Based on current planning, Taiwan will still remain the world’s most important producer of AI semiconductors, not only for Taiwanese companies, but globally,” Taiwanese Economic Affairs Minister Kung Ming-hsin assured reporters on Friday.
Production capacity for the advanced chips that power artificial intelligence systems will be split about 85-15 between Taiwan and the United States by 2030 and 80-20 by 2036, he projected.
Reacting to the deal, Cheng Li-wun, chairperson of the Kuomintang party, which advocates closer ties with Beijing, criticised the deal.
She said that increasing Taiwanese investment in US chip production capacity risked “hollowing out” the island’s economy.
Sector-specific tariffs on Taiwanese auto parts, timber, lumber and wood products will also be capped at 15 per cent, while generic pharmaceuticals and certain natural resources will face no “reciprocal” duties, the US Commerce Department said.
Meanwhile, Taiwanese chip and tech businesses are set to make “new, direct investments totalling at least $250 billion” in the United States to build and expand capacity in areas like advanced semiconductors and AI, the department said.
More than half of Taiwan’s exports to the United States are information and communications technology products — including semiconductors.
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