U.S. reduces tariffs as Taiwan boosts investment

On Thursday, the United States reached a trade agreement with Taiwan, agreeing to lower the reciprocal tariff on Taiwanese goods from 20 percent to 15 percent. In return, Taiwan pledged an additional $250 billion in government credit guarantees on top of $250 billion in investment by Taiwanese companies, including Taiwan Semiconductor Manufacturing Co., in the United States.

The U.S. Commerce Department said the same day that Taiwanese semiconductor and technology companies had committed at least $250 billion in direct investment in the United States. In exchange for the reduced tariff, TSMC is expected to lead large-scale investments aimed at building advanced semiconductor, energy, and artificial intelligence production and innovation capabilities in the United States. Separately, the Taiwanese government will provide at least $250 billion in credit guarantees to support the construction of U.S. semiconductor supply chains, the department said.

The United States also said it would exempt from tariffs volumes equal to 2.5 times production capacity for Taiwanese companies building semiconductor facilities in the United States during construction. Once those facilities are completed, tariffs will not apply to output equal to up to 1.5 times production capacity. Attention is now turning to whether South Korea will seek additional talks with the U.S., after securing assurances last year through a trade agreement that it would not receive less favorable treatment than Taiwan in the semiconductor sector.


Jin-Woo Shin niceshin@donga.com