Taiwan and the United States reach a trade agreement, reducing tariffs to 15%

The United States and Taiwan reached a final trade agreement on Thursday, reducing Taiwan's export tariffs to the U.S. from 20% to 15%, the same agreement reached with Japan and South Korea last year. Taiwan's semiconductor companies will increase their total investment and financing in the U.S. to $500 billion.

According to the agreement, Taiwan's technology industry commits to invest at least $250 billion in direct investments to expand advanced semiconductor, energy, and artificial intelligence businesses in the U.S., while additionally providing $250 billion in credit guarantees to support semiconductor supply chain investments.

The agreement affects chip manufacturers such as TSMC (TSM.US), which is reportedly required to build at least four additional chip factories in Arizona, in addition to the previously committed six factories and two advanced packaging facilities. U.S. Department of Commerce officials stated that the company will lead the new investment plan.

Furthermore, the agreement sets the tariff cap for Taiwanese automotive parts, wood, and related products at 15%, exempts general pharmaceuticals made in Taiwan from import taxes, and provides tariff exemptions for new semiconductor factories in the U.S., allowing tax-free imports of products up to 2.5 times existing capacity during the construction period, which will be reduced to 1.5 times after the factory is completed