U.S. and Taiwan reach trade deal lowering tariffs to 15% and boosting semiconductor investment
Taiwan's chip and tech companies will invest at least $250 billion in U.S. production capacity under the agreement, with tariffs reduced from 20%.
January 15, 2026
The U.S. and Taiwan have agreed to a trade deal that reduces tariffs on Taiwanese goods to 15%, down from the previous 20% rate, the Department of Commerce announced Thursday. The agreement aligns Taiwan's tariff rate with those already in place for Japan and South Korea, which reached their own deals last year.
Under the accord, Taiwanese semiconductor and technology companies have committed to making new direct investments totaling at least $250 billion in the United States to expand production capacity in advanced semiconductors, artificial intelligence, and energy sectors. Taiwan will also provide credit guarantees of at least $250 billion to facilitate additional investment by Taiwanese enterprises in the American semiconductor supply chain.
The deal includes sector-specific tariff caps at 15% on Taiwanese auto parts, timber, lumber, and wood products. The U.S. also committed to zero reciprocal tariffs on generic pharmaceuticals, their ingredients, aircraft components, and some natural resources.
Commerce Secretary Howard Lutnick said the agreement would help the U.S. become "self-sufficient" in semiconductor production. The Commerce Department stated the deal "will drive a massive reshoring of America's semiconductor sector."
Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, has already purchased hundreds of acres adjacent to its existing property in Arizona as part of the agreement, according to Lutnick. TSMC announced separately that it expects to boost capital spending in 2026 to between $52 billion and $56 billion.
A high-level delegation of Taiwanese officials visited Washington to finalize the agreement with representatives of the Trump administration. The deal was announced shortly after their meetings concluded.
Building up domestic semiconductor production has been a priority for the U.S. since supply chain disruptions during the Covid-19 pandemic exposed vulnerabilities in chip availability. Semiconductors are essential components in machines ranging from cars to smartphones.
Asia-Pacific markets showed mixed performance Friday following the announcement. Japan's Nikkei 225 index slipped 0.41%, extending losses from Thursday, while the broad-based Topix declined 0.42%. South Korea's Kospi rose 0.3%. U.S. semiconductor stocks led gains on Wall Street, with investors monitoring chip-related shares across Asia following the trade agreement.