TAIPEI (Taiwan News) — Fitch Ratings said Tuesday that Taiwan’s semiconductor sector will benefit from the new tariff agreement with the US, though risks remain.

The credit rating agency said Taiwan and the US concluded talks on Jan. 15, lowering Taiwan’s base tariff from 20% to 15%, per CNA. The new rate matches South Korea and Japan and slightly exceeded Fitch’s August 2025 expectations.

The deal provides short-term relief for Taiwan’s export-driven economy, especially its semiconductor sector. Exports to the US accounted for 33% of total goods exports and 22% of GDP in 2025, with machinery and electrical equipment making up 88% of shipments.

Fitch warned that large overseas investments could raise medium-term capital outflow risks. Taiwanese semiconductor firms have pledged about NT$7.87 trillion (US$250 billion) in US investment, which could reduce net exports’ contribution to growth.

Chipmakers have received duty-free quotas, exempting them from a 25% tariff on certain advanced chips under Section 232. The measure aims to promote wafer fabrication and advanced packaging in the US to strengthen supply chains.

Companies such as TSMC are expected to announce further US spending to meet the duty-free thresholds. Capital outflows may be partly offset by reshoring from China and potential reciprocal US investment in Taiwan.

Fitch said relocating high-end manufacturing overseas could weaken Taiwan’s long-term semiconductor competitiveness. Global supply chains remain sensitive to tariffs, which can squeeze margins and raise consumer prices.

Fitch said Taiwan’s banking sector will benefit from a more stable economy. Stronger exporter profits and corporate earnings should support asset quality, though rising overseas investment may weigh on loan growth over time.