The United States and Taiwan on Thursday announced a comprehensive trade and investment agreement designed to trigger a revival of the U.S. semiconductor sector in the homeland.
The deal, announced in a release by the Department of Commerce, establishes an economic partnership between the countries to strengthen domestic semiconductor supply chains through $500 billion in direct investment and credit guarantees.
The centerpiece of the agreement is a twofold financial commitment from Taiwan aimed at rebuilding U.S. leadership in the technological and industrial sectors.
The Taiwanese government will provide an additional $250 billion in new, direct investments to build advanced production facilities for chips, energy, and artificial intelligence in the U.S.
Taiwan will also provide $250 billion in credit guarantees to facilitate the expansion of a full semiconductor supply chain ecosystem on American soil.
The “unprecedented commitment” will have the U.S. and Taiwan establish industrial parks to strengthen America’s industrial infrastructure — the goal being to establish the U.S. as the “global center for next-generation technology, advanced manufacturing and innovation.
Beyond direct investment, the pact establishes a new, predictable tariff framework to enhance trade between the two countries.
In exchange, the U.S. will cap reciprocal tariffs on Taiwanese imports at 15%, a reduction from the 20% rate imposed under the Trump administration’s broader reciprocal tariff crackdown.
The agreement also grants a zero percent rate on certain critical goods, including aircraft components and generic pharmaceuticals.
To support the construction phase, companies building new U.S. chip fabrication plants, such as TSMC, can import two and a half times their building capacity duty-free during construction. Once completed, they can continue to import one and a half times their U.S. production capacity.
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The pact follows a series of high-stakes negotiations led by Commerce Secretary Howard Lutnick as part of a broader “America First” strategy to re-shore critical manufacturing.
These efforts aim to reverse decades of U.S. offshoring. “Semiconductors are vital for America’s industrial, technological, and military strength,” the department said in the release. ”Yet, for far too long, the Washington establishment allowed this strategic sector to move offshore, leaving the United States dependent on foreign manufacturers and brittle global supply chains. The Trump Administration is committed to reversing that trend.”