enca - 26 days ago

US says reached deal with Taiwan to lower tariffs, boost investments Estelle.Bronkhorst Fri, 01/16/2026 - 06:00 WASHINGTON - The United States said that it has signed a deal with Taiwan to reduce tariffs on goods from the democratic island, while increasing Taiwanese semiconductor and tech companies investments in America.The agreement, the US Commerce Department said, will drive a massive reshoring of America s semiconductor sector. Under the deal, Washington will lower tariffs on Taiwanese goods to 15 percent, down from a 20 percent reciprocal rate meant to address US trade deficits and practices it deems unfair.Sector-specific tariffs on Taiwanese auto parts, timber, lumber and wood products will also be capped at 15 percent, while generic pharmaceuticals and certain natural resources will face no reciprocal duties, the US Commerce Department added.Meanwhile, Taiwanese chip and tech businesses are set to make new, direct investments totalling at least $250 billion in the United States to build and expand capacity in areas like advanced semiconductors and artificial intelligence, the department said.Taiwan will also provide credit guarantees of at least $250 billion to facilitate additional investment by Taiwanese enterprises, the department said adding that this would support the growth of the US semiconductor supply chain.Taiwan s government said the new tariff will not stack on top of existing duties, which had been a major concern for local industries. Of course it s good that the reciprocal tariff has been lowered to 15 percent -- at least it puts us on par with our main competitors South Korea and Japan, said Chris Wu, sales director for Taiwanese machine tool maker Litz Hitech Corp. But, given the company s single-digit profit margins, there is no way we can absorb the tariff for US customers, he said. The department s announcement did not mention names, but the deal has key implications for Taiwanese chipmaking titan TSMC, the world s biggest contract maker of microchips used in everything from Apple phones to Nvidia s cutting-edge AI hardware.In an interview with CNBC, Commerce Secretary Howard Lutnick said TSMC has bought land and could expand in Arizona as part of the deal. They just bought hundreds of acres adjacent to their property. Now I m going to let them go through it with their board and give them time, he said.TSMC did not immediately respond to a request for comment.Taiwanese producers who invest in the United States will also be treated more favorably when it comes to future semiconductor duties, the Commerce Department said.Firms building new US chip capacity may import up to 2.5 times their planned capacity without paying sector-specific duties during construction. The quota lowers to 1.5 times once projects are completed.A day prior, US officials held off imposing wider chip tariffs, instead announcing a 25 percent duty on certain semiconductors meant to be shipped abroad -- a key step in allowing Nvidia to sell advanced AI chips to China.Ryan Majerus, a former US trade official, told AFP that although chip tariffs are currently narrowly targeted, Washington signalled there is certainly potential for it to grow. Majerus, now a partner at law firm King Spalding, added that the deal had parallels to those with other US partners. The European Union and Japan, for example, both also secured a 15-percent tariff rate.

Latest News

Hashtags:   

reached

 | 

Taiwan

 | 

lower

 | 

tariffs

 | 

boost

 | 

investments

 | 

Sources