Taiwan to Pour Hundreds of Billions of Dollars into U.S. Semiconductors and Energy...Tariff Agreement Finalized

Taiwan has concluded a tariff agreement with the United States by committing around 60 billion dollars to purchases of U.S. energy and aircraft, and by spending hundreds of billions of dollars to relocate parts of its semiconductor supply chain to the United States. Under the agreement, tariffs on imports from Taiwan have been reduced from 20% to 15%.

According to Bloomberg News on February 13, the United States and Taiwan reached this agreement last month and announced it on February 12 (local time). Tariffs on imports from Taiwan will be lowered from the previous 20% to 15%. However, generic drugs, semiconductors, and smartphones are excluded from the tariff cuts.

Taiwan has agreed to purchase more than 44 billion dollars (about 63.47 trillion won) worth of liquefied natural gas (LNG) and crude oil from the United States. It will also open its market to U.S. products such as beef, dairy products, pork, wheat, and medical products. Taiwan will purchase about 15 billion dollars worth of U.S.-made civilian aircraft and parts by 2029 and invest about 25 billion dollars in the power generation equipment sector.

Jamieson Greer of the Office of the United States Trade Representative (USTR) said in a statement, "This reciprocal trade agreement will provide more opportunities for American farmers, fishers, workers, small businesses, and manufacturers by eliminating tariff and non-tariff barriers that Taiwanese exports faced," adding, "Building on our longstanding economic and trade relationship with Taiwan, it will significantly strengthen the resilience of our supply chains, particularly in advanced technology sectors."

However, Taiwan’s pledged investments in semiconductor manufacturing in the United States remain uncertain. No detailed information has been released on how the investment funds will be deployed. Taiwan had initially pledged 250 billion dollars in direct investment in advanced semiconductors, energy, and artificial intelligence (AI) operations in the United States, and had also agreed to provide an additional 250 billion dollars in government loan guarantees to strengthen the U.S. semiconductor supply chain.

In return, Taiwanese companies will be able to export a certain volume of semiconductors to the United States tariff-free. Bloomberg News projected that Taiwan will receive preferential treatment in future U.S. semiconductor tariffs and related measures, while the United States is expected to expand its investment in Taiwan’s key industries.

Meanwhile, Taiwan’s Kuomintang, which holds a majority in the legislature in coalition with minor opposition parties, criticized the negotiations as lacking transparency. Concerns have also been raised about food safety issues related to feed additives used in U.S. pork and beef, as well as the potential damage to the local livestock industry.