Trump administration nears deal with Taiwan
The deal, which has been negotiated for months, is being legally finalized and could be announced this month. The agreement would reduce U.S. tariffs on goods coming from the island to 15%, the sources said. This rate is in line with imports from Asian allies Japan and South Korea, which signed a deal last year.
As part of the deal, TSMC will commit to building at least five more semiconductor facilities or factories in Arizona, roughly doubling the number of facilities in the state, one of the sources said. The timeline for the investments was not immediately clear. A TSMC spokesperson declined to comment.
Since announcing tariffs on dozens of trading partners in April, the Trump administration has negotiated lower rates in exchange for promises of investment and deals that meet U.S. national security priorities. South Korea and Japan have pledged to invest hundreds of billions of dollars in U.S. shipbuilding, nuclear energy, electronics and critical minerals.
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Along with Taiwan, the Trump administration has wanted the island to invest in more semiconductor manufacturing in the United States. Taiwan dominates global production of the chips that are the brains of computers and the data centers needed for artificial intelligence. But trusting the island is looking increasingly risky, given Beijing’s claim that Taiwan belongs to China and should one day be brought under Chinese control. China has conducted live-fire drills around the island, and officials and administrators worry that an invasion could disrupt global supply chains for electronics, automobiles and weapons.
TSMC, the world’s leading chipmaker, has completed a factory in Arizona since 2020, is completing a second factory that will open in 2028, and has pledged to build four more in the coming years. But it has agreed to add at least five more as part of US-Taiwan trade talks.
The Office of the United States Trade Representative and the Department of Commerce did not comment.
Trade talks with Taiwan have dragged on as the two sides debate what to do about tariffs. The Trump administration announced that it has made limited trade agreements with countries in recent months in order to reorganize the US’s commercial relations. Trump briefly implemented “reciprocal” tariffs globally in April, then paused them and then reimposed them in August.
Since then, importers of Taiwanese products have paid a 20% tariff when bringing goods into the United States. But the administration exempted semiconductors and many electronics from those tariffs, saying those sectors would be subject to separate national security tariffs issued under the legal provision known as Section 232.
The administration has also used the national security law to impose tariffs on steel, aluminum, automobiles, copper, lumber and other goods. The Section 232 investigation into semiconductors, conducted by the Department of Commerce, was expected to take place last year. This has led to speculation that the Trump administration is not moving forward on this issue for fear of disrupting the trade truce with China.
Potential tariffs on chips pose a direct threat to the island and TSMC. Semiconductors account for more than a third of Taiwan’s exports, and the most valuable of those chips come from TSMC’s network of more than 20 factories.
The Taiwanese government had previously completed trade talks with the Office of the United States Trade Representative, but continued to discuss Section 232 tariffs and TSMC’s domestic investment plans with the Department of Commerce. Those talks only recently ended when TSMC purchased another parcel of land in Arizona for its expansion.
Although administration officials have said companies investing domestically will not be subject to Section 232 tariffs, it is unclear exactly how the regulation will work.
Taiwanese officials declined to comment. Taiwan’s trade office told reporters on Dec. 26 that the two sides broadly agreed on a trade deal that includes the U.S. side providing Taiwan with reciprocal tariff reductions and preferential treatment under Article 232.
The office said earlier this year that the two sides were unable to finalize a trade deal because the bulk of U.S.-Taiwan trade was in chips and semiconductor tariffs were still evolving.
