The American Institute in Taiwan and the Taipei Economic and Cultural Representative Office have signed a trade agreement that will build new semiconductor factories in the United States.
The deal involves Taiwanese tech companies investing at least USD 250 billion (AUD 374 billion) in production facilities in the United States in exchange for a restructured U.S. tariff framework on Taiwanese industrial and pharmaceutical goods.
Under this agreement, tariff rates for Taiwanese goods are now capped at a maximum of 15% – down from 20%. These apply to Taiwanese exports, such as auto parts, timber, lumber and wood derivative products. A 0% “reciprocal tariff” will be applied to generic pharmaceuticals and their ingredients, aircraft components and some natural sources.
“The United States and Taiwan will establish world-class industrial parks in the United States to strengthen America’s industrial infrastructure and position the United States as the global centre for next-generation technology, advanced manufacturing, and innovation,” the U.S. Department of Commerce said in a statement last week.
Beyond tariff adjustments, the deal includes measures to increase market access and investment between the two regions.
Taiwan will facilitate expanded U.S. investment within its own domestic industries, specifically focusing on defence technology, telecommunications, biotechnology, semiconductors, and artificial intelligence. This is intended to deepen technological collaboration and strengthen the U.S. position in these critical emerging sectors.
The trade deal also includes specific “reward” mechanisms for Taiwanese semiconductor companies that localise production in the United States. Companies building new U.S. capacity can import up to 2.5 times their planned capacity duty-free. Once a Taiwanese company finishes building its new factory in the United States, the U.S. government will allow that company to bring in extra chips from its overseas plants without charging them the standard “security” tax, according to the Commerce Department’s statement.
