U.S. signs trade deal with Taiwan, lowering tariffs to 15%

Washington and Taipei will sign a trade deal that reduces tariffs on Taiwanese exports to 15%, on par with Asian allies Japan and South Korea, while the island will open its market to US goods.

Taiwan will eliminate or reduce 99% of its tariff barriers on U.S. goods, as well as provide “preferential market access” for U.S. industrial and agricultural exports. These include automobiles, beef products and minerals.

Taiwan also plans It will purchase more than $84 billion in U.S. goods from 2025 to 2029, including liquefied natural gas and crude oil, as well as aircraft and power equipment.

The U.S. Trade Representative’s office said Taiwan has committed to “resolving long-standing non-tariff barriers,” such as accepting U.S. vehicles built to U.S. Federal Motor Vehicle Safety Standards without any additional requirements.

This deal was first announced in January, with Taiwanese chip and technology companies committing to invest at least $250 billion in manufacturing capacity in the United States, backed by an equal amount of government loans “to facilitate additional investment by Taiwanese businesses.”

However, Taiwan and the US have different views on chip supply chains.

The goal under the US President is to bring 40% of Taiwan’s entire semiconductor supply chain to the US, Commerce Secretary Howard Lutnick told CNBC last month. He also said Taiwan-based chip companies that do not manufacture in the United States would likely face 100% tariffs.

But Taiwan withdrew that proposal, telling Washington it was “impossible” to move 40% of the island’s semiconductor supply chain to the United States, according to Taipei’s chief tariff negotiator.

Vice Premier Cheng Li-chiun told local media that Taiwan’s semiconductor ecosystem, built over decades, cannot be easily replaced.

Taiwan’s international expansion, including investments in the United States, is based on the idea that the industry has established roots in Taiwan and continues to expand domestic investment, he said in Mandarin, translated by CNBC.

China, which considers democratically governed Taiwan as part of its territory, criticized the agreement in January. “It would only exhaust Taiwan’s economic interests” He added that the ruling Democratic Progressive Party allowed the US to do so. “cavity” the island’s key industry.

Chinese President Xi Jinping discussed Taiwan’s reunification with the mainland “a historical inevitability.” Taiwan denies these allegations.

Although the United States does not have a mutual defense agreement with Taiwan and has no obligation to defend the island, Taiwan Relations Act of 1979 It states that the United States will “provide to Taiwan such defense materials and defense services as may be necessary to enable Taiwan to maintain adequate self-defense capabilities.”

In December, the United States approved $11.15 billion in arms sales to Taiwan; This is one of Taiwan’s largest deals with the island as it faces increasing threats from China. This drew a harsh reaction, with Beijing’s foreign affairs spokesman Guo Jiakun accusing the US of violating the “one China principle”.

— CNBC’s Anniek Bao and Dylan Butts contributed to this story.