The United States and Taiwan have entered into a significant new trade agreement, with the U.S. cutting tariffs on Taiwanese goods from 20% to 15%. In a reciprocal move, Taiwan has pledged to remove 99% of its own tariff barriers. The U.S. Trade Representative's office noted the new 15% rate aligns with tariffs applied to other key Asia-Pacific trade partners like South Korea and Japan.
The deal aims to address a substantial trade imbalance, which saw the U.S. run a deficit of roughly $127 billion with Taiwan in the first 11 months of 2025, partly due to heavy reliance on Taiwanese semiconductor chips. U.S. Trade Representative Jamieson Greer stated the agreement, forged under President Donald Trump's leadership, fosters prosperous trade ties and allows Taiwanese companies to compete fairly with European and Asian rivals.
In a separate but related announcement, Taiwan unveiled plans to invest up to $250 billion in U.S. industries, focusing on energy, semiconductor chips, and AI applications. An additional $250 billion in credit guarantees will be provided to help smaller companies invest in the United States. Taiwan's chip-making giant, TSMC, is expected to be a key investor, committing up to $165 billion. The U.S. Commerce Department described the pact as historic, driving a "massive reshoring" of America's chip sector and leading to the establishment of world-class industrial parks in the U.S.
The agreement comes as Taiwan's economy, turbocharged by AI demand and semiconductor exports, expanded at an annual rate of 8.6% in 2025—its fastest pace in 15 years. Exports to the U.S. surged 78% last year. Economists from Bank of America and Deutsche Bank project continued strong, though slightly moderated, growth for 2026, supported by sustained global AI investment.
