USA and Taiwan there is reached trade agreement on construction chips and chip factories on American soil, Department of Commerce announced on Thursday.
Under the agreement, Taiwanese chip and technology companies will invest at least $250 billion in US manufacturing capacity, and the Taiwanese government will guarantee $250 billion in loans to these companies.
Instead, the US will cap reciprocal tariffs on Taiwan from 20% to 15% and impose zero reciprocal tariffs on generic pharmaceuticals, their ingredients, aircraft components and some natural resources.
Taiwan Semiconductor has purchased land and may expand in Arizona as part of the deal, Commerce Secretary Howard Lutnick told CNBC’s Brian Sullivan in an interview Thursday.
“They just bought hundreds of acres next to their property,” Lutnick said. “I’m going to let them board and give them time.”
The announcement said future tariffs under Section 232 would have some exceptions for companies that assemble chips in the U.S. for Taiwanese companies that build new U.S. chip factories. TSMC — while plants are under construction, they can import up to 2.5 times the capacity under construction without paying tariffs.
According to the announcement, Taiwanese auto parts, lumber and related products will avoid the 15% higher tariffs under Section 232.
Once the plants are complete, companies will be able to import 1.5 times more than their U.S. production capacity, Commerce said.
The agreement provides clarity for chip companies and technology firms that have struggled over the past year with uncertainty over the Trump administration’s approach to tariffs in the semiconductor industry.
It also encourages TSMC, the world’s leading fab company, to continue building more factories on US soil, while also showing that it can continue to build chips for American companies in Taiwan.
Lutnick said in an interview that Taiwanese chip companies that don’t set up in the U.S. could face a 100 percent tariff. He said the government’s goal is to bring 40% of Taiwan’s semiconductor supply chain to the US.
“If they don’t live in America, the tariff could be 100%,” Lutnick said.
TSMC has already invested $40 billion in manufacturing chips for companies, building factories in Arizona. Apple and NvidiaUsing previous grants of US government money under the CHIPS Act.
The US government has prioritized American manufacturing of advanced chips as the battle for access to AI semiconductors has become a major geopolitical issue.
US officials have also said there are significant risks to the US economy China takes over Reduces access to Taiwan and TSMC chips.
“We’re bringing all of this to be self-sufficient in semiconductor manufacturing capacity,” Lutnick said.
