The United States and Taiwan signed a trade deal that will lower tariffs on Taiwanese exports to 15% and open the island’s market to U.S. goods.
$84 Billion US Purchase Commitment
The new trade deal aligns tariffs on Taiwanese exports with those of other Asian allies such as Japan and South Korea. The agreement stipulates that Taiwan will eliminate or reduce 99% of tariff barriers on U.S. goods, and provide “preferential market access” for U.S. industrial and agricultural exports, including autos, beef products, and minerals.
Taiwan has also committed to buying over $84 billion in U.S. goods from 2025 to 2029. The list includes liquefied natural gas, crude oil, aircraft, and power equipment.
The U.S. Trade Representative’s office confirmed that Taiwan has agreed to “resolve longstanding non-tariff barriers,” including the acceptance of U.S. vehicles built to U.S. Federal Motor Vehicle Safety Standards without imposing any additional requirements.
Under the deal first announced in January, Taiwanese tech and chip firms pledged to invest at least $250 billion in U.S. production capacity, backed by an equal amount in government credit to encourage further investment by these companies.
US-Taiwan Chip Relocation Clash
Relocation of chip supply chains has been a point of contention between Taiwan and the U.S. The U.S. aims to relocate 40% of Taiwan’s semiconductor supply chain to the U.S., and last month, Commerce Secretary Howard Lutnick warned that Taiwanese chip companies not building in the U.S. could face a 100% tariff.
However, Taiwan has refused to shift 40% of its semiconductor capacity to the US. The country’s top tariff negotiator had pushed back against US demands, stating that such a large-scale relocation was not feasible.
Meanwhile, Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) has been expanding its manufacturing footprint beyond Taiwan to navigate tariff uncertainty and China-related risks, as well as to meet the surging AI-driven demand for leading-edge chips. The company’s plan to manufacture advanced chips in Japan is a strategic move to spread production beyond Taiwan and safeguard against shifting US tariff policy and the risk of a potential China-led blockade around the island.
Beijing Slams Taiwan-US Pact
China criticized the January agreement, arguing it would harm Taiwan’s economic interests and accusing the ruling Democratic Progressive Party of allowing the U.S. to hollow out the island’s key industries. The Xi Jinping-led nation insists Taiwan is part of its territory, a claim the democratically governed island firmly rejects.
Beijing had previously underscored Taiwan as “the most important issue” in its relationship with the U.S. During a recent call with President Donald Trump, the Chinese president reportedly urged the U.S. to approach arms sales to Taiwan cautiously and handle the matter with prudence.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
Recent Comments