US and Taiwan agree to lower tariffs and boost chip investments
Taiwan has announced a new trade deal with the United States aimed at reducing tariffs and increasing Taiwanese investment in American semiconductor manufacturing. Cho Jung-tai and Kung Ming-hsin highlighted Taiwan’s ongoing dominance in AI chip production, despite US efforts to bring more chipmaking onshore. The agreement will see significant Taiwanese investment in US chip and tech sectors, with support from both governments. The deal has drawn mixed reactions in Taiwan, with concerns about potential impacts on the local economy and supply chain.
What we know
- The US and Taiwan reached a trade agreement to lower tariffs on Taiwanese goods to 15 per cent, down from a previous 20 per cent “reciprocal” rate.
- Taiwanese chip and tech businesses are set to invest at least $250 billion in the United States, with additional credit guarantees of at least $250 billion to support further investment.
- Cho Jung-tai praised the negotiators for their efforts, while Kung Ming-hsin assured that Taiwan will remain the world’s leading producer of AI semiconductors.
- The deal must be approved by Taiwan’s opposition-controlled parliament, where some lawmakers have expressed concern about losing chip industry dominance.
- The agreement also affects tariffs on Taiwanese auto parts, timber, lumber, wood products, and pharmaceuticals, and has significant implications for companies like TSMC.
