TAIPEI (Taiwan News) — The US and Taiwan are reportedly close to finalizing a trade deal that would lower tariffs on Taiwanese exports to match those applied to Japan and South Korea.
The New York Times reported Monday that tariffs on Taiwanese imports would be cut from 20% to 15% under the agreement. TSMC would also commit to building at least five additional fabs in Arizona.
Negotiated over several months, the deal is now undergoing legal review and could be announced later this month, according to the report. The timeline for TSMC’s investments remains unclear.
The report highlighted Taiwan’s dominant role in global chipmaking, with its semiconductors underpinning computers and AI data centers. However, tensions with China have heightened concerns about reliance on Taiwanese chips.
China has conducted live-fire drills around the Taiwan Strait, most recently in December. This has prompted concerns among government and corporate leaders that a potential Chinese attack on Taiwan could disrupt global supply chains for electronics, automobiles, and weapons.
TSMC has completed one Arizona fab, and a second is expected to begin production in 2028, with four more planned. According to the NYT, as part of the deal, TSMC would build at least five more plants.
The trade talks have been delayed over debates over tariffs. The Trump administration has announced only limited trade agreements with a small number of countries in recent months.
In April last year, Trump rolled out tariffs worldwide, which were later suspended and then reinstated in August, requiring importers of Taiwanese goods to pay a 20% tariff. Semiconductors and many electronics were exempt pending a Section 232 national security review.
Semiconductors account for more than one-third of Taiwanese exports, with the most valuable chips produced at TSMC’s more than 20 fabs.
While talks with the US Trade Representative have concluded, discussions with the US Commerce Department over Section 232 and TSMC’s US investments continued. Those talks ended only recently, as TSMC bought additional land in Phoenix to expand operations.
US officials have said companies investing in the US would be exempt from Section 232 tariffs. How that exemption would be applied, however, remains unclear.
