US–Taiwan deal to cut tariffs and expand Taiwanese investment in US semiconductors

Yahoo
Yahoo
1d ago
The United States signed a deal with Taiwan to cut tariffs on Taiwanese goods to 15 percent and secure at least $250 billion in new Taiwanese chip and tech investment in the United States.
US–Taiwan deal to cut tariffs and expand Taiwanese investment in US semiconductors
A What happened
Washington will lower tariffs on Taiwanese goods to 15 percent from a 20 percent reciprocal rate, and cap sector-specific tariffs on Taiwanese auto parts and wood products at 15 percent. Taiwanese chip and tech businesses are set to make new direct investments totalling at least $250 billion in the United States, and Taiwan will provide credit guarantees of at least $250 billion to facilitate additional investment. Taiwan’s government said the new tariff will not stack on top of existing duties, and a Taiwanese machine tool executive said his company cannot absorb the tariff for US customers given single-digit profit margins. US officials also announced a 25 percent duty on certain semiconductors meant to be shipped abroad, described as a step allowing Nvidia to sell advanced AI chips to China.
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Key insights

  • 1

    US objective stated as reshoring Taiwan-linked semiconductor production: Commerce Secretary Howard Lutnick said the objective is to bring 40 percent of Taiwan’s entire supply chain and production into the United States so the United States becomes self-sufficient in semiconductor-building capacity.

  • 2

    Tariff relief paired with investment and duty incentives: The Commerce Department linked the 15 percent tariff rate and future semiconductor-duty treatment to Taiwanese firms’ investments in US chip capacity, including temporary duty-free import allowances tied to planned capacity during construction.

  • 3

    Potential for broader chip tariffs signaled: Ryan Majerus said that although chip tariffs are currently narrowly targeted, Washington signaled potential for them to grow.

Takeaways

The deal sets a 15 percent tariff rate for Taiwanese goods while tying expanded Taiwanese investment and incentives to increased US-based semiconductor capacity.

Topics

World & Politics International Affairs Technology & Innovation Semiconductors Trade & Tariffs

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