The United States and Taiwan have finally signed a trade agreement after months of discussions and negotiations. According to the agreement, the White House will impose a 15% customs duty on Taiwanese goods. This rate is the same as that applied to the US's Asian allies, Japan and South Korea. In return, Taiwan has agreed to further open its market to US-origin products.
Here are the details of the agreement
Under the agreement, Taiwan will either completely eliminate or significantly reduce 99% of customs barriers on US products. Additionally, the US will be granted "privileged market access" for its industrial and agricultural products. These items include automobiles, beef products, and various minerals. Taiwan also plans to purchase over $84 billion worth of products from the US between 2025 and 2029, including liquefied natural gas (LNG), crude oil, aircraft, and energy equipment.
However, the 15% customs duty will not apply to chips and semiconductors from Taiwan. Instead, Washington has granted Taiwanese chip manufacturers permission to import chips up to 2.5 times their total production capacity in the US without paying any tariffs. This ratio will decrease to 1.5 times after the factory to be established in the US becomes operational, providing preferential treatment to Taiwanese chip companies. However, companies that refuse to invest in US territory will face extremely severe sanctions and be subject to a 100% customs duty.
This agreement was first announced in January. At that time, Taiwanese chip and technology companies pledged to invest at least $250 billion in production capacity in the US, with the Taiwanese government also announcing it would provide an equal amount of credit support.
The US wanted 40% of Taiwan's semiconductor production to move to the country
However, there are disagreements between the US and Taiwan regarding the semiconductor supply chain. US Secretary of Commerce Howard Lutnick stated last month that the goal was to move 40% of Taiwan's entire semiconductor supply chain to the US. He also noted that Taiwan-based chip companies that do not invest in the US could face a 100% customs duty.
Taiwan, on the other hand, opposed this proposal, arguing that it is impossible to move a semiconductor ecosystem that has developed over decades to another country on such a scale. Taiwan's Deputy Prime Minister Cheng Li-chiun stated in local media that the deeply rooted structure of the industry in Taiwan must be preserved. He emphasized that investments made in the US should be supportive of the industry's presence in Taiwan, rather than weakening it.
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