The United States and Taiwan agreed on Thursday to a trade deal that cuts tariffs on Taiwanese goods while Taiwan’s technology companies plan $250 billion in new investment in the U.S., according to the U.S. Department of Commerce and statements from Taiwan’s executive branch.
The tariff changes reflect a revision in the figure Trump had set earlier. The Associated Press reported that Trump initially set a 32% tariff on Taiwanese goods before later changing it to 20%, and that the new agreement lowers the rate to 15%, the same level applied to other U.S. trading partners in the Asia-Pacific region, including Japan and South Korea.
In a statement, the U.S. Department of Commerce said the deal would establish an “economic partnership” and create several “world-class” U.S.-based industrial parks intended to strengthen domestic production. The department also described it as “a historic trade deal that will drive a massive reshoring of America’s semiconductor sector.”
Taiwan’s government affirmed key details, saying the “Taiwan model” will go to the U.S. and help expand the island’s technology industry while deepening strategic cooperation between the two nations. Taiwan’s executive branch said companies on the island would specifically invest $250 billion in industries including semiconductors, artificial intelligence applications and energy.
The Commerce Department also said the agreement includes exemptions for certain imports from Taiwan, including generic pharmaceuticals and aircraft components. It said Taiwanese semiconductor producers that invest in the U.S. would receive favorable tariff treatment, including exemptions.
The deal drew immediate criticism from Beijing, which claims Taiwan is part of China. One day before the agreement was announced, Beijing called it “an economic plunder” by the U.S. on Taiwan, the report said.
The announcement landed shortly after Taiwan-based TSMC, the world’s largest contract chipmaker, disclosed plans to increase capital spending by as much as nearly 40% this year after reporting a 35% jump in net profit for the October-December quarter, aided by the demand backdrop for artificial intelligence-related products.
TSMC reported net profit of 506 billion new Taiwan dollars ($16 billion) for the quarter, and said its revenue rose 21% from a year earlier to more than 1.046 trillion new Taiwan dollars ($33 billion). The company said it plans to raise its 2026 capital expenditure budget to $52 billion-$56 billion, up from about $40 billion last year.
On a conference call, TSMC’s chief financial officer Wendell Huang said, “We expect our business to be supported by continuous strong demand for our leading edge process technologies,” and added that spending would be “significantly higher” in the next three years. Asked about concerns over an AI “bubble,” TSMC chairman and chief executive C. C. Wei said, “I’m also very nervous about it, you bet,” and added, “AI is real. Not only real, it’s starting to grow into our daily life.”
TSMC said it has pledged around $165 billion in investments in the U.S. and is speeding up construction of new plants in Arizona. Analysts at Morningstar, in a report cited by the AP, said TSMC is “immune from market share shifts as almost every AI company relies on TSMC to make chips,” and that this reliance translates into “strong pricing power,” citing a robust backlog from customers.