US and Taiwan Near Trade Deal Linking Tariff Cuts to Chipmaking Expansion

The United States and Taiwan are finalizing a trade agreement that ties tariff reductions to semiconductor manufacturing investments. The draft terms lower U.S. tariffs on Taiwanese goods to 15%, aligning with rates applied to Japan and South Korea. Taiwan Semiconductor Manufacturing Corporation (TSMC) is expected to commit to a significant expansion in Arizona as part of the deal.

Since April, the Trump administration has Leveraged tariffs to secure domestic investments tied to national security objectives. Semiconductor imports from Taiwan were previously exempt from the 20% tariff rate applied to most goods, but they may now face separate national security reviews under Section 232 provisions.

The agreement reflects a broader strategy of using trade policy to bolster critical supply chains. Japan and South Korea previously secured tariff relief by pledging investments in shipbuilding, nuclear power, and electronics. With Taiwan, the focus remains squarely on reinforcing U.S. chip production capabilities.