US, Taiwan seal trade pact cutting tariffs and securing $250 billion chip investment

The United States and Taiwan formally executed a trade agreement on Thursday, reaching a consensus to slash tariffs on a spectrum of food imports and a variety of other commodities.

President Donald Trump announced last week that Washington would reduce tariffs on Taiwanese imports to 15%, contingent upon a massive $250 billion commitment from Taipei to the US chip sector—a move designed to fortify semiconductor supply chains and galvanize American manufacturing.

This strategic adjustment aligns levies on Taiwanese goods with those imposed on Japan and South Korea. It is accompanied by a US pledge to abolish tariffs on generic pharmaceuticals, aerospace components, and natural resources unavailable domestically within the US.

The accord effectively erases Taiwan’s competitive disadvantage, calibrating the island’s new bilateral tariff rate to parity with other premier US trading partners.

Per the full text of the agreement, the US will eliminate “reciprocal” tariffs on select imports from Taiwan, including fruits, spices, and coffee.

In a bid to curb food inflation for US consumers, the Trump administration opted to exempt a broad swathe of agricultural products from the wider scope of reciprocal tariffs.

The pact codifies significant procurement commitments from Taipei. Over the next three years, Taiwan has agreed to disburse $44.4 billion for liquefied natural gas (LNG) and crude oil, $15.2 billion for civil aircraft and engines, and $25.2 billion for energy infrastructure equipment.

Furthermore, Taipei consented to lower tariffs on a host of American exports, including automobiles and auto parts, chemicals, seafood, machinery, healthcare products, electronics, metals, and minerals, as well as numerous agricultural commodities.

US Trade Representative Jamieson Greer stated that the agreement would “significantly increase the resilience of our supply chains, especially in high-tech sectors.”

Greer further noted that the deal is set to “eliminate tariff and non-tariff barriers that US exports face in Taiwan,” thereby expanding opportunities for “American farmers, ranchers, fishermen, workers, small businesses, and manufacturers.”