WASHINGTON — The Trump administration reached a significant trade deal with Taiwan on Thursday, with Taiwan agreeing to remove or reduce 99% of its tariff barriers, the office of the U.S. Trade Representative (USTR) announced.
The agreement comes as the U.S. remains heavily reliant on Taiwan for its production of computer chips. Chip exports contributed to a trade imbalance of nearly $127 billion during the first 11 months of 2025, according to the Census Bureau. Under the new deal, most of Taiwan’s exports to the U.S. will be taxed at a 15% rate, which aligns with tariffs levied on other U.S. trading partners in the Asia-Pacific region, such as Japan and South Korea.
Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick attended the signing of the reciprocal agreement. The ceremony took place under the auspices of the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States. Taiwan’s Vice Premier Li-chiun Cheng and government minister Jen-ni Yang were also present.
“President Trump’s leadership in the Asia-Pacific region continues to generate prosperous trade ties for the United States with important partners across Asia, while further advancing the economic and national security interests of the American people,” Greer said in a statement.
The Taiwanese government emphasized that the tariff rate set in the agreement allows its companies to compete on a level playing field with counterparts in Japan, South Korea, and the European Union. Taiwan also stated that the agreement “eliminated” the disadvantage caused by the absence of a formal free trade agreement between Taiwan and the U.S.
This deal comes ahead of President Donald Trump’s planned visit to China in April, signaling a deepening economic relationship between the U.S. and Taiwan. It’s important to note that Taiwan is a self-ruled democracy claimed by China as its own territory — which Beijing has vowed to annex by force if necessary. China also prohibits countries with which it has diplomatic relations, including the U.S., from maintaining formal ties with Taipei.
Under the terms of the deal, Taiwan will invest $250 billion in U.S. industries such as computer chips, artificial intelligence applications, and energy. Additionally, the Taiwanese government plans to provide up to $250 billion in credit guarantees to assist smaller businesses in making investments in the U.S.
The agreement also aims to make it easier for the U.S. to sell autos, pharmaceutical drugs, and food products in Taiwan. However, the most critical component may be Taiwanese investment in domestic U.S. computer chip production, which could help reduce the trade imbalance.
These substantial investments helped the U.S. reduce its initially planned tariffs from as high as 32% to 15%. Taiwan’s government will submit the deal and investment plans to its legislature for approval.
From the U.S. perspective, the agreement is expected to facilitate the creation of several “world-class” industrial parks designed to bolster domestic manufacturing of advanced technologies, including semiconductors. In January, the Commerce Department described the deal as “a historic trade agreement that will drive a massive reshoring of America’s semiconductor sector.”
In return, the U.S. will give preferential treatment to Taiwan regarding potential tariffs stemming from a Section 232 investigation into the importation of computer chips and semiconductor manufacturing equipment.
TSMC, the Taiwanese chip-making giant, is expected to be the key investor in this initiative. The company has committed $165 billion towards investments in the U.S., which include fabrication plants and a major research and development center. This R&D center will help build a supply chain to support U.S. ambitions in artificial intelligence.
Major U.S. tech companies such as Nvidia and AMD rely on TSMC for manufacturing highly advanced chips. The investment agreement also envisions two-way investments, with U.S. companies investing in key Taiwanese industries.
For example, Nvidia recently signed a land deal in Taipei to build its new headquarters office there, highlighting the growing economic ties between the two partners.
https://abcnews.go.com/Technology/wireStory/trump-administration-reaches-trade-deal-lower-taiwans-tariff-130120134
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