US and Taiwan agree to cut tariffs and secure at least $250bn in chip investment

The US said on Thursday that it had signed a deal with Taiwan to reduce tariffs on goods from the island while increasing Taiwanese semiconductor and tech companies’ investments in the United States. The commerce department said the agreement "will drive a massive reshoring of America’s semiconductor sector".

Under the deal, Washington will lower tariffs on Taiwanese goods to 15%, down from a 20% "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%, the department said.

The commerce department said Taiwanese chip and tech businesses are set to make "new, direct investments totaling at least $250bn" in the US to build and expand capacity in areas like advanced semiconductors and artificial intelligence, and that Taiwan will provide "credit guarantees of at least $250bn to facilitate additional investment by Taiwanese enterprises." The announcement did not name firms but has key implications for TSMC.

In an interview with CNBC the 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.

Key Topics

Business, Tsmc, Taiwan, Semiconductors, Tariff Deal, Howard Lutnick