TAIPEI (Taiwan News) — Taiwan’s tariff agreement with the US is expected to reduce uncertainty for businesses while opening new pathways for supply-chain diversification, Nikkei Asia reported Thursday.
Under the deal reached last week, US tariffs on Taiwanese exports will be cut to 15%, down from 20% imposed by President Donald Trump in August, bringing Taiwan into line with Japan and South Korea. Taipei also secured preferential treatment under Section 232 national security tariffs.
In exchange, the agreement establishes a “Taiwan model” for US investment, with Taiwanese companies expected to commit up to NT$7.9 trillion (US$250 billion), mainly in semiconductors, energy, and AI. Taiwan’s government will support those projects through credit guarantees of the same amount.
The Asia Group Managing Partner Kurt Tong said the framework gives Taiwan room to expand capacity while diversifying its role in global supply chains. He described the loan-guarantee mechanism as a new tool that could unlock projects that might otherwise not proceed.
“The Taiwan side did a fine job of negotiating under difficult circumstances,” said Tong, a former top US diplomat in Hong Kong, per Nikkei. “And now they have got a basis to go forward with.”
Tong said Taipei had taken a cautious approach to negotiations, which extended the talks but resulted in terms that appear stronger than those secured by Japan and South Korea. On paper, he said, the deal provides clearer benefits and fewer constraints.
Markets reacted positively, with Barclays upgrading its 2026 growth forecast for Taiwan to 3.9% from 1.9%, citing reduced uncertainty, according to Bloomberg.
The agreement also carries geopolitical weight, as it could spur job-creating Taiwanese investment in the US at a time when Washington is reshaping alliances and trade across Asia and Europe.
For President Lai Ching-te (賴清德), the pact strengthens efforts to anchor US support while countering economic pressure from China. Beijing has used trade restrictions and other measures to intimidate Taiwan.
Opposition politicians, however, have voiced concern that the deal could expose Taiwan’s automotive and agricultural sectors to US competition. Specific market-access provisions have not yet been announced, raising the prospect of legislative resistance.
KMT Chair Cheng Li-wun (鄭麗文) warned that zero-tariff access for US goods could hurt domestic industries. Tong acknowledged the risk of political backlash but said such reactions are common when economies open markets under external pressure, per Nikkei.
Critics have also argued that expanded semiconductor investment in the US could hollow out Taiwan’s most strategic industry. That argument is expected to dominate debate as lawmakers review the agreement.
Taiwan’s former envoy to the European Union and trade negotiator Roy Chun Lee (李淳) rejected those claims, saying overseas expansion has long been essential to Taiwan’s competitiveness, per Nikkei. Flexibility in production locations has sustained Taiwan’s position in the global supply chain for decades, he explained, pointing to earlier shifts into China, Southeast Asia, and Mexico.
Lee added that passage of a long-pending US–Taiwan agreement to avoid double taxation would further strengthen economic ties, echoing calls from major business groups on both sides.
Unlike deals with Japan and South Korea, the Taiwan agreement does not mandate state-directed investment, leaving decisions to companies while limiting government exposure. US-Taiwan Business Council President Rupert Hammond-Chambers said while that structure carries risks, the probability of a broad default is low given TSMC’s size.
