US-Taiwan Trade Deal to See US$500 Billion Taiwan Investment, Tariffs Cut to 15%

TaiwanPlus News

Taiwan and the US have announced a trade deal that lowers Taiwan’s main tariff rate from 20% to 15% and ends tariff stacking, while setting zero tariffs on select products such as generic drugs, aircraft parts and natural resources. Taiwan pledged US$500 billion, split between private investment, including TSMC’s existing US$100 billion pledge, and government-backed credit to support more expansion in the US, along with support for industrial clusters similar to Taiwan’s science parks.

Transcript

00:00Taiwan and the U.S. have announced a long-awaited trade deal.

00:04The agreement will see reciprocal tariffs on Taiwan lowered, while Taiwan has pledged

00:09hundreds of billions of U.S. dollars to help bolster semiconductor manufacturing in the

00:14U.S.

00:15For more on the deal, we turn to our reporter Chris Gorin, who's been following developments

00:19from our Taipei newsroom.

00:21Chris, what's in the deal?

00:24Well, a lot of money for U.S.-based chipmaking, that's for sure.

00:30$500 billion U.S. dollars, to be exact.

00:33In an exchange, the U.S. will lower tariffs on Taiwan in a number of areas, but let's

00:37start with what Taiwan is promising.

00:39Now of that $500 billion, half will be private investment, and that includes TSMC's existing

00:45$100 billion pledge from last year.

00:48The other half will be government-backed credit to help more firms expand in the U.S.

00:53And lastly, Taiwan will help the U.S. create industrial clusters similar to Taiwan's science

00:58parks.

00:59Now on the tariff side, Taiwan's main tariff rate drops from 20 to 15 percent.

01:03That brings it in line with neighbors such as Japan and South Korea.

01:07There will be no stacking of multiple tariffs, zero tariffs on select products like generic

01:11drugs, aircraft parts and natural resources, and tariff exemptions for chip companies investing

01:16in the U.S. with bigger exemptions for firms that invest more.

01:20And U.S. officials have been quite clear about what they ultimately want from Taiwan in this

01:24deal.

01:27So the objective is to bring 40 percent of Taiwan's entire supply chain and production to domestically

01:36bring it into America.

01:37And here's the goal during President Trump's term.

01:41So you can see there, U.S. setting some pretty big goals for Taiwan.

01:47So, Chris, what has Taiwan said about the deal?

01:53Well, Lie administration officials from the president on down have been quite positive

01:59about the deal, calling it a win for Taiwan's industries.

02:02But some in Taiwan, notably opposition parties, have expressed concern about moving so much

02:07of Taiwan's chip production overseas.

02:09Now, Taiwan's vice premier actually addressed this in a post-deal announcement press conference

02:15in Washington, specifically addressing that 40 percent number from Howard Lutnick.

02:41Now, it's expected that much of this investment will come from Taiwan chip giant TSMC, especially

02:46after reports earlier this week that they may double the number of facilities they've already

02:50committed to building in Arizona.

02:52Now, I reached out to TSMC, which did not confirm those reports, but they did say that they welcome

02:58the prospect of robust trade agreements between the United States and Taiwan, and that strength

03:03in trade relations are essential for advancing future technologies and ensuring a resilient

03:08semiconductor supply chain.

03:10Now, the full legal text of the deal has not yet been released, but Taiwan officials say

03:15they will release that to the public as soon as it's ready, where they will bring it to

03:19the legislature for a vote, and where it may ultimately face some pretty tough scrutiny from

03:23the opposition.

03:24Thanks, Chris.

03:28That was Chris Goran, live from our Taipei newsroom.

03:30And that was Chris Goran, live from our Taipei newsroom.

03:30We'll see you next time.

03:31Thanks for listening.

03:33Thanks, Chris.

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