The United States and Taiwan have reached a trade agreement aimed at expanding semiconductor production on American soil, the U.S. Department of Commerce announced on Thursday.
Under the agreement, Taiwanese chip and technology companies will invest at least $250 billion in U.S. manufacturing capacity, while the Taiwanese government will guarantee an additional $250 billion in credit to support those investments.
In return, the U.S. will reduce reciprocal tariffs on Taiwan to 15%, down from 20%, and apply zero reciprocal tariffs on generic pharmaceuticals, pharmaceutical ingredients, aircraft components and certain natural resources.
Commerce Secretary Howard Lutnick said Taiwan Semiconductor Manufacturing Co. has already acquired land in Arizona and could expand its existing operations there. TSMC said its investment decisions remain driven by market conditions and customer demand, while continuing to invest both in Taiwan and overseas.
The agreement also includes exemptions under the Section 232 tariff framework. Taiwanese companies building chip factories in the U.S. will be allowed to import up to 2.5 times their planned production capacity while construction is underway without paying tariffs. Once factories are completed, imports of up to 1.5 times U.S. production capacity will be permitted.
Taiwanese auto parts, lumber and related products will also be shielded from tariffs exceeding 15% under the same framework.
U.S. officials said the deal provides long-awaited clarity for semiconductor and technology firms that have faced uncertainty over trade policy. Lutnick warned that Taiwan-based chipmakers that do not invest in U.S. production could face tariffs of up to 100%, stressing that Washington aims to relocate 40% of Taiwan’s semiconductor supply chain to the United States.
TSMC has already invested up to $40 billion in Arizona fabs producing chips for companies such as Apple and Nvidia, supported by U.S. government incentives under the CHIPS Act.
The agreement reflects Washington’s broader push to secure domestic production of advanced semiconductors, amid concerns over artificial intelligence supply chains and the economic risks posed by a potential conflict involving Taiwan.
