Trump Admin Secures Taiwan Trade Deal for Increased Investment
The Trump administration has finalized a trade agreement with Taiwan, which will see Taiwan eliminate or lower 99 percent of its tariff barriers, according to the office of the US Trade Representative. The agreement arises as the US continues to depend on Taiwan for its computer chip production, which has played a significant role in a trade imbalance of nearly $127 billion during the first 11 months of 2025, as reported. Taiwan’s exports to the US will incur a tax of 15 per cent or the “Most Favoured Nation” rate set by the US government, according to a statement from the USTR’s office on Thursday. The 15 per cent rate mirrors that imposed on other US trading partners within the Asia-Pacific region, including Japan and South Korea. Trade Representative Jamieson Greer attended the signing of the reciprocal agreement, which occurred 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 at the signing.
The agreement arrives prior to President Donald Trump’s scheduled trip to China in April, indicating a strengthening economic bond between the US and Taiwan. Taiwan operates as a self-ruled democracy, while China asserts that it is its own territory, to be annexed by force if necessary. Beijing prohibits all countries with which it maintains diplomatic relations – including the US – from establishing formal ties with Taipei. Under the agreement, Taiwan will invest $250 billion in US industries, including computer chips, artificial intelligence applications, and energy. The Taiwanese government has announced that it will extend up to an additional $250 billion in credit guarantees to support smaller businesses in their investments in the US.
The agreement aims to facilitate the sale of autos, pharmaceutical drugs, and food products from the US to Taiwan. However, a crucial element could be that Taiwanese companies may invest in the production of computer chips in the US, potentially contributing to the alleviation of the trade imbalance. The investments facilitated a reduction in the US’s planned tariffs, decreasing them from a high of 32 percent to 15 percent. The US side stated that the agreement with Taiwan aims to establish multiple “world-class” industrial parks in America to bolster domestic manufacturing of advanced technologies, including chips. The Commerce Department in January characterized it as “a historic trade deal that will drive a massive reshoring of America’s semiconductor sector”.
The US would, in return, extend preferential treatment to Taiwan concerning potential tariffs arising from a Section 232 investigation into the importation of computer chips and semiconductor manufacturing equipment. TSMC, the chip-making giant, is anticipated to be the principal investor. The company has pledged $165 billion in investments within the US, encompassing not just fabrication plants but also a significant research and development center aimed at establishing a supply chain to support the nation’s artificial intelligence goals. Prominent US tech firms like Nvidia and AMD depend on TSMC for the production of cutting-edge chips.
