Taiwan and US seal deal to lower tariffs, boost chip investment

Washington seeks improved access to strategic chip industry of island nation, over which China claims sovereignty.Published On 16 Jan 2026Taiwan and the United States have struck a trade deal that will see the island nation boost tech and energy investments in the US in exchange for lower tariffs.In a statement announcing the deal late on Thursday, the US Commerce Department said Taiwan’s semiconductor and technology businesses will invest at least $250bn in the US. In exchange, it said Washington will reduce its general tariff on imports of Taiwanese goods from 20 percent to 15 percent.Recommended Stories list of 3 itemslist 1 of 3China slams Netherlands for chip supply snarls tied to Nexperialist 2 of 3Chipmaker Nvidia hits $5 trillion valuationlist 3 of 3Can India catch up with the US, Taiwan and China in the global chip race?end of listThe deal illustrates an ongoing push by the US to improve access to Taiwan’s semiconductor industry. The island nation holds a dominant position in the supply of the chips used in advanced digital technology across the world and, therefore, a critical component in the global economy, but it faces Chinese claims over its sovereignty.President Donald Trump announced a 32 percent tariff on Taiwanese goods as part of his sweeping “Liberation Day” tariffs last spring, a rate he later lowered to 20 percent.The Commerce Department said the “historic” deal “will strengthen US economic resilience, create high-paying jobs, and bolster national security”.In addition to investing $250bn in building and expanding advanced semiconductor, energy, and artificial intelligence production and innovation capacity in the US, Taiwan will provide at least the same amount in credit guarantees for additional investment by its businesses in the US semiconductor supply chain.Silicon shieldTaiwan stressed that it would remain the world’s main semiconductor supplier.