The United States and Taiwan have signed a historic Agreement on Trade and Investment designed to restore American leadership in semiconductor manufacturing, strengthen national security, and reduce reliance on offshore supply chains.

The agreement was signed by the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States, marking one of the most significant trade and investment commitments in the semiconductor sector to date.

Advancing America-First Trade and Investment

The agreement establishes a strategic economic partnership between the United States and Taiwan, with the goal of reshoring semiconductor production, expanding advanced manufacturing, and reinforcing America’s technological and industrial base.

According to the U.S. Commerce Department, the deal will:

  • Strengthen U.S. economic resilience

  • Create high-paying American jobs

  • Bolster national and economic security

  • Secure critical semiconductor supply chains

Major Investment Commitments

Direct Investment in the United States

Taiwanese semiconductor and technology companies will commit at least $250 billion in direct investment to build and expand:

  • Advanced semiconductor manufacturing

  • Energy production

  • Artificial intelligence research and innovation capacity

Additional Financing Support

Taiwan will also provide credit guarantees totaling at least $250 billion, enabling further investment across the entire semiconductor ecosystem, from fabrication to advanced components and materials.

Building Industrial Clusters in the U.S.

As part of the agreement, the United States and Taiwan will develop world-class industrial parks on U.S. soil. These clusters are intended to:

  • Strengthen U.S. industrial infrastructure

  • Position the United States as a global hub for next-generation technology

  • Accelerate innovation in advanced manufacturing and AI

Taiwan will also facilitate greater U.S. investment into its own semiconductor, artificial intelligence, defense technology, telecommunications, and biotechnology sectors—expanding market access and technological collaboration for American firms.

Tariff Framework and Trade Provisions

The agreement introduces a predictable and balanced tariff structure:

  • The U.S. reciprocal tariff rate on Taiwanese goods will not exceed 15%

  • Section 232 duties on Taiwanese auto parts, timber, lumber, and wood derivative products will also be capped at 15%

  • A 0% reciprocal tariff will apply to:

    • Generic pharmaceuticals and ingredients

    • Aircraft components

    • Unavailable natural resources

Incentives for Semiconductor Manufacturing in the U.S.

To encourage U.S.-based production, the agreement provides special treatment under Section 232 for Taiwanese semiconductor producers investing domestically:

  • Companies building new U.S. capacity may import up to 2.5 times their planned capacity without paying Section 232 duties during construction

  • Above-quota imports will receive preferential Section 232 rates

  • After projects are completed, companies may still import up to 1.5 times their new U.S. production capacity duty-free

Future Section 232 duties on Taiwanese semiconductors will explicitly reward producers that invest in U.S. manufacturing.

Why Semiconductor Supply Chains Matter

Semiconductors are foundational to modern life—powering everything from smartphones and vehicles to telecommunications infrastructure and military systems.

Yet the U.S. share of global semiconductor wafer fabrication has fallen from 37% in 1990 to under 10% in 2024, largely due to foreign industrial policies and offshore production incentives.

The Trump Administration’s Commerce Department says this agreement represents a turning point, reversing decades of offshoring and launching a coordinated, whole-of-government effort to revitalize American semiconductor manufacturing.