Trump administration reaches trade deal to lower Taiwan’s tariff barriers

The Trump administration has reached a trade deal with Taiwan, with Taiwan agreeing to remove or reduce 99 per cent of its tariff barriers, the office of the US Trade Representative said. The agreement comes as the US remains reliant on Taiwan for its production of computer chips, the exporting of which contributed to a trade imbalance of nearly $127 billion during the first 11 months of 2025, according to the Census Bureau.

Taiwan’s exports to the US will be taxed at a 15 per cent rate or the US Government’s “Most Favoured Nation” rate, the USTR’s office said on Thursday. The 15 per cent rate is the same as that levied on other US trading partners in the Asia-Pacific region, such as Japan and South Korea. Trade Representative Jamieson Greer attended the signing of the reciprocal agreement, which occurred under the auspices of the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States.

Taiwan’s Vice Premier Li-chiun Cheng and its Government minister Jen-ni Yang also attended the signing. The deal comes ahead of President Donald Trump’s planned visit to China in April and suggests a deepening economic relationship between the US and Taiwan. Taiwan is a self-ruled democracy that China claims as its own territory, to be annexed by force if necessary. Beijing prohibits all countries it has diplomatic relations with — including the US — from having formal ties with Taipei.

Under the deal, Taiwan will make investments of $250 billion in the US industries such as computer chips, artificial intelligence applications and energy. The Taiwanese Government says it will provide up to an additional $250 billion in credit guarantees to help smaller businesses invest in the US. The agreement would make it easier for the US to sell autos, pharmaceutical drugs and food products in Taiwan. But the critical component might be that Taiwanese companies would invest in the production of computer chips in the US, possibly helping to ease the trade imbalance.

The investments helped enable the US to reduce its planned tariffs from as much as 32 per cent initially to 15 per cent. The US side said the deal with Taiwan would help create several “world-class” industrial parks in America in order to help build up domestic manufacturing of advanced technologies such as chips. The Commerce Department  described it as “a historic trade deal that will drive a  reshoring of America’s semiconductor sector”.

In return, the US would give preferential treatment to Taiwan regarding the possible tariffs stemming from a Section 232 investigation of the importing of computer chips and semiconductor manufacturing equipment. TSMC, the chip-making giant, is expected to be the key investor. It has committed to $165 billion in investments in the US, including not only fabrication plants but also a research.