U.S.-Taiwan deal cuts tariffs and secures at least $250 billion

The United States and Taiwan reached a bilateral agreement that reduced reciprocal tariffs on most Taiwanese goods to 15% and locked in sweeping commitments to expand U.S. semiconductor and technology capacity. The Commerce Department said the pact would "drive a massive reshoring of America's semiconductor sector" and outlined investment and financing pledges that together signal a major reorientation of global tech supply chains.

Under the agreement, broad reciprocal tariffs on Taiwanese exports were lowered from 20% to 15%, placing Taiwan on par with recent U.S. arrangements with other Asian economies. Sector-specific reciprocal tariffs for products such as auto parts, timber, lumber and wood products were capped at 15%, while certain categories including generic pharmaceuticals, aircraft components and some natural resources were exempted from reciprocal duties at 0%.

For the semiconductor sector the deal offered additional relief: Taiwanese chipmakers that expand production in the United States will face lower tariffs on semiconductors and related manufacturing equipment and in some cases will be allowed to import items duty-free during construction or as specified under the agreement. Those targeted provisions are intended to accelerate factory builds and equipment deployment for advanced chips and AI-related manufacturing.

On the financial side, Taiwanese semiconductor and technology firms committed to "new, direct investments totaling at least $250 billion" in the United States to build and expand capacity in advanced semiconductors and artificial intelligence. Taiwan's government also pledged "credit guarantees of at least $250 billion to facilitate additional investment by Taiwanese enterprises." Some commentators have combined those two commitments into a $500 billion headline figure, but the Commerce Department's text treats them as distinct elements.

The announcement did not list corporate names, but implementation signals were already visible. Industry filings and government permitting activity point to substantial expansion plans in Arizona, where Taiwan Semiconductor Manufacturing Co. has sought approvals for additional facilities and where, as Commerce Secretary Howard Lutnick said in a televised interview, TSMC "has bought hundreds of acres adjacent to their property." Those moves would extend recent U.S. industrial policy goals aimed at onshoring advanced chip production and bolstering AI-related supply chains.

The deal faces immediate legal and political crosscurrents. The U.S. Supreme Court is expected to rule soon on the president's authority to impose broad tariffs without congressional approval, creating uncertainty about the legal footing for presidentially imposed reciprocal duties and any administrative adjustments. On the Taiwan side, officials said the sector tariff caps and implementing measures will be subject to parliamentary review in Taipei.

Markets registered the implications quickly, with attention focused on chipmakers and equipment suppliers that would benefit from lower duties and investment incentives. The agreement arrived alongside strong financial results for key Taiwanese firms, reinforcing investor expectations of an acceleration in capital expenditure and factory builds in the United States.

In the medium term the pact advances a strategic economic objective: shifting a larger share of critical semiconductor capacity to U.S. soil while preserving trade access. The success of that strategy will hinge on the pace of permitting and utility access, the mechanics of tariff relief tied to investment milestones, and how legal rulings and geopolitical responses, particularly from China, affect execution and investor confidence.