U.S. slashes Taiwan tariffs in new semiconductor trade deal — Washington to reduce tariffs to 15% in exchange for $500 billion stateside manufacturing investment

The U.S. and Taiwan just settled on a new trade deal that will see Washington cut tariffs on the island from 20% to 15%. In exchange for this, Taipei committed at least $250 billion in direct investments in the U.S. on advanced semiconductor manufacturing, energy production and distribution, and artificial intelligence operations. Aside from this, the Taiwanese government also committed an additional $250 billion in credit guarantees for its companies investing in American semiconductor operations. This brings the total amount in the trade deal to $500 billion, according to Bloomberg, but already includes the $100 billion U.S. investment that TSMC announced in March 2025.

TSMC is reportedly looking to further expand its U.S. presence, with plans to build four more fabs on top of the planned, under-construction, and existing facilities in Arizona. “They just bought hundreds of acres adjacent to their property,” U.S. Commerce Sec. Howard Lutnick said in an interview with CNBC. “I’ll let them go through with their board and give them time.”

In line with this, Taiwanese chip makers constructing facilities in the U.S. are entitled to import 2.5 times their current capacity without import taxes, with the limit reducing to 1.5 times once they start stateside production. On the other hand, Taiwanese companies that refuse to play ball with the White House will receive severe penalties. “If they don’t build in America, the tariff’s likely to be 100%,” Lutnick said. “If they commit to build in America, they can bring in their semiconductors during the time they’re building in America without a tariff.”

This massive spending increase by Taiwanese companies in the U.S. is a big win for the Trump administration, especially as it targets increasing domestic cutting-edge chip production. The White House claims that the United States consumes 25% of the market for the most advanced semiconductors. However, it only produces about 10% of the global volume, meaning it’s dependent on chip imports for its most advanced technologies. Taiwan is producing the other 90%, and with China posing a significant threat to the island, the U.S. is nervous that any hostile move would cripple its ability to get the chips that it needs.

The more than $500 billion commitment will help the U.S. bring semiconductor manufacturing back within its borders, helping secure its high-tech supply chain. On the other hand, there have been concerns that this expansion will reduce the potency of the island’s “silicon shield.” Taipei addressed this by refusing to move half of U.S.-bound chip production to American shores, while also restricting TSMC from exporting its most advanced nodes outside of Taiwan.

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