Taiwan has reached a trade agreement with the United States aimed at reducing tariffs on its shipments and expanding Taiwanese investment in American semiconductor production. The deal was announced Friday, with both sides describing it as a major step toward strengthening the global chip supply chain.
Under the agreement, Washington will lower tariffs on Taiwanese goods from 20 per cent to 15 per cent. In return, Taiwanese companies will invest at least $250 billion in the US, including projects focused on advanced semiconductors and artificial intelligence (AI) chips. Taiwanese firms will also provide credit guarantees of a similar value to facilitate further investment, the US Commerce Department said.
Taiwanese Premier Cho Jung-tai praised the outcome, calling it a “well-executed home run” after months of negotiations. Economic Affairs Minister Kung Ming-hsin assured that Taiwan would remain the world’s leading producer of AI semiconductors, projecting production to be split roughly 85–15 between Taiwan and the US by 2030.
The deal addresses US concerns about over-reliance on Taiwan amid rising tensions with China, which claims the island as its territory. US Commerce Secretary Howard Lutnick described the agreement as a “massive reshoring” of America’s semiconductor sector, aimed at increasing domestic capacity and ensuring technological self-sufficiency.
Taiwan’s chip industry, a global powerhouse, has long been regarded as a “silicon shield” that deters potential Chinese aggression. Concerns over supply disruptions have heightened US interest in relocating production closer to home, particularly for AI and other advanced chips.
While the deal has received broad support from Taiwanese and US officials, opposition lawmakers in Taiwan have raised concerns about potential risks to the island’s domestic chip dominance. Cheng Li-wun of the Kuomintang warned that increased investment in the US could “hollow out” local production and weaken Taiwan’s economic position.
Industry players welcomed the agreement. Chris Wu, sales director at Taiwanese machine tool maker Litz Hitech Corp, said lowering tariffs puts Taiwan on par with competitors like South Korea and Japan, while TSMC, the world’s largest contract chipmaker, called the deal a boost for “a resilient semiconductor supply chain.”
The arrangement also signals closer US-Taiwan cooperation in AI chip production, with Taiwanese firms expected to expand facilities on US soil, including Arizona, where TSMC has already acquired land for future plants. Officials emphasised that the deal balances domestic production goals with Taiwan’s ongoing role as a global leader in semiconductor technology.
