US Reportedly Pressured Taiwan to Invest $250B in US Chip Production
▼ Summary
– The US has reduced tariffs on Taiwanese goods from 20% to 15% in exchange for a $250 billion investment by Taiwanese tech companies in US chipmaking facilities.
– The deal includes tariff-free import allowances for these companies during and after construction of their US factories.
– US Commerce Secretary Howard Lutnik stated that a 100% tariff on foreign-made chips remains a threat if companies do not build in America.
– Lutnik suggested Taiwan agreed to the deal partly to appease President Trump, whom he described as vital for Taiwan’s protection.
– Taiwan Semiconductor Manufacturing Co. (TSMC), a major participant, had previously committed $100 billion and may expand further with new facilities in Arizona.
A recent trade agreement between the United States and Taiwan centers on bolstering American semiconductor manufacturing while offering Taiwan reduced tariffs. The U.S. Commerce Department confirmed the deal, which lowers tariffs on Taiwanese goods from 20% to 15%. In exchange, Taiwanese technology firms have committed to investing $250 billion into constructing and expanding chipmaking facilities within the United States. This investment will be backed by a minimum of $250 billion in credit provided by Taiwan’s government.
The arrangement includes significant tariff concessions for the participating Taiwanese companies. During the approved construction phase for new U.S. factories, these firms can import equipment and materials up to 2.5 times their planned production capacity without facing additional duties. After construction finishes, they can import tariff-free up to 1.5 times their actual U.S. production capacity. The U.S. also agreed to remove reciprocal tariffs on several categories, including generic pharmaceuticals, pharmaceutical ingredients, aircraft parts, and specific natural resources.
This agreement unfolds against a backdrop of previous tariff threats from the U.S. administration. Last year, former President Donald Trump warned of imposing a 100 percent tariff on chips and semiconductors not manufactured in America. Commerce Secretary Howard Lutnick reiterated that this option remains active, stating that such a tariff is what other nations “get if they don’t build in America.” The administration has also begun enforcing a 25 percent tariff that applies to advanced AI chip sales in China by companies like Nvidia and AMD, allowing the U.S. government to claim a portion of those revenues.
When questioned about Taiwan’s motivations given the potential geopolitical risks with China, Lutnick suggested the agreement was driven by a need to maintain positive relations with the U.S. leadership. He remarked that Taiwan struck the deal because “they need to keep our president happy,” emphasizing that “Donald Trump is vital to protecting them.”
Taiwan Semiconductor Manufacturing Company (TSMC), the globe’s leading chip producer, is poised to be a major player in this initiative. The company had already pledged over $100 billion last year to expand its U.S. manufacturing operations. Reports indicate TSMC will help lead the new $250 billion investment wave, with potential for further growth. Lutnick noted that TSMC has purchased hundreds of acres next to its existing property in Arizona, where plans are underway to build up to six new semiconductor fabrication plants.
(Source: The Verge)
