Semiconductor deal: Taiwan commits $250B for 5% tariff relief

The United States and Taiwan have finalized a significant trade agreement to boost semiconductor manufacturing within the U.S. Taiwanese chip and technology firms will invest at least $250 billion in American production capacity, supported by a $250 billion credit guarantee from the Taiwanese government. In exchange, the U.S. will reduce reciprocal tariffs on Taiwan from 20% to 15%, with zero tariffs on generic pharmaceuticals, aircraft components, and certain natural resources. The deal also links tariff relief directly to U.S. manufacturing activity, allowing Taiwanese companies to import chip components tariff-free up to certain limits based on their U.S. production capacity. Commerce Secretary Howard Lutnick emphasized that companies not investing in U.S. manufacturing could face tariffs as high as 100%, underscoring the U.S. goal to relocate 40% of Taiwan’s semiconductor supply chain domestically. Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, has already committed up to $40 billion to build chip fabs in Arizona