The United States and Taiwan have reached a trade and investment agreement that will see Taiwanese chip and technology companies invest at least $250 billion in US semiconductor manufacturing, the US Department of Commerce announced on Thursday.
Under the deal, Taiwanese firms will expand production capacity on American soil, including the construction of new chip fabrication plants.
The Taiwanese government will also provide up to $250 billion in credit guarantees to support additional investment tied to the buildout of the semiconductor supply chain in the United States.
In exchange, the US will reduce reciprocal tariffs on Taiwanese goods to no more than 15%, down from 20%, and commit to zero reciprocal tariffs on generic pharmaceuticals, their ingredients, aircraft components, and certain natural resources. Section 232 duties on Taiwanese auto parts, timber, and related products will also be capped at 15%.
Commerce Secretary Howard Lutnick said Taiwan Semiconductor Manufacturing. has already taken steps that could lead to further expansion in the US, particularly in Arizona.
“They just bought hundreds of acres adjacent to their property,” Lutnick told CNBC, adding that future plans would depend on company board approvals.
The agreement includes provisions aimed at encouraging domestic chip production. Taiwanese companies building new semiconductor facilities in the US will be allowed to import up to 2.5 times the capacity they are constructing without paying Section 232 tariffs while factories are under construction. After projects are completed, companies will still be permitted to import up to 1.5 times their new US production capacity without such duties.
The agreement comes amid broader efforts by the US government to rebuild domestic chipmaking capacity. The Commerce Department noted that the US share of global wafer fabrication has fallen from about 37% in 1990 to less than 10% in 2024, with most semiconductor production now concentrated in East Asia.