The US and Taiwan have struck a major trade deal that cuts tariffs on key Taiwanese exports, including semiconductors, while securing USD 250 billion in new investment for US technology and chip production. The agreement strengthens ties with Taipei amid rising tensions with China and aims to bring a significant portion of Taiwan’s chip supply chain to the US.
The US and Taiwan have finalised a significant trade agreement that will reduce tariffs on many Taiwanese exports, boost US technology investment, and strengthen ties between Washington and Taipei amid rising tensions with China.
Under the deal, tariffs on most Taiwanese exports to the US will drop from 20% to 15%. Specific items, including generic pharmaceuticals, aircraft components, and certain natural resources, will be subject to a 0% tariff. Taiwanese chipmakers that expand production in the US will benefit from lower tariffs on semiconductors and related manufacturing equipment, and some imports can be duty-free.
This follows Taiwan officials’ announcement on 1 December 2025 that they aim to reduce tariffs on its exports to the US from 20% to 15%.
As part of the agreement, Taiwanese companies are set to invest USD 250 billion to expand semiconductor, energy, and artificial intelligence production in the US. This includes USD 100 billion already pledged by TSMC in 2025. Taiwan will also guarantee an additional USD 250 billion in credit to support further investment.
US Commerce Secretary Howard Lutnick said the goal is to bring 40% of Taiwan’s chip production capacity to the US. Firms that meet expansion targets will be allowed to import up to 2.5 times their new US capacity for semiconductors and wafers without additional tariffs during approved construction periods.
The deal is expected to benefit suppliers across the semiconductor industry, including major equipment makers like ASML, Lam Research, and Applied Materials, as well as smaller chemical and materials suppliers.
The deal still requires formal approvals. Taiwan’s cabinet will schedule a date to sign the agreement with the US Trade Representative, after which it will be reviewed by Taiwan’s parliament. An announcement of the finalised terms could come as early as the end of January 2026.
Earlier, US President Donald Trump imposed a 25% tariff on certain high-performance AI chips, including Nvidia’s H200 and AMD’s MI325X, following a nine-month Section 232 investigation that deemed these imports a national security risk.
