The Trump administration is on the verge of finalizing a trade agreement with Taiwan that would reduce U.S. tariffs on Taiwanese imports and prompt a significant expansion of Taiwan Semiconductor Manufacturing Co.’s (TSMC) investment in chip production facilities on American soil, according to Bloomberg, citing sources familiar with the matter.
One source noted that the pending accord would see tariffs on products from Taiwan lowered to 15%, down from the current rate of 20%. This adjustment would align Taiwan’s tariff treatment with that of Japan and South Korea, both of which reached similar trade arrangements with Washington last year.
Central to the deal is TSMC’s commitment to construct at least four additional semiconductor manufacturing plants in Arizona. This would add to the six fabs and two advanced packaging plants the Taiwanese chipmaker has already pledged to establish in the state. TSMC, the world’s top producer of advanced chips critical to artificial intelligence development, has faced mounting scrutiny in Washington as geopolitical tensions persist between Taiwan and China.
TSMC’s extended commitment could elevate its U.S. investments, currently estimated at up to US$165 billion, by an additional US$100 billion or more, given that each new facility requires over US$20 billion to construct. The proposed four new fabs would be completed in the 2030s. The New York Times first reported on Monday that a trade framework could be unveiled as early as this month.
This potential accord caps months of negotiations between President Donald Trump’s administration and the Taiwanese government. However, any formal agreement with Taipei runs the risk of aggravating Beijing, which continues to assert sovereignty over Taiwan—a claim the island rejects.
Moreover, significant uncertainties remain regarding the benefits of the tentative agreement and the speed with which it could be finalized. The U.S. Supreme Court is set to issue a ruling on the legality of Trump’s broader tariff strategy as early as Wednesday. Overturning the tariffs could diminish a central tool the president has employed in trade discussions.
Since unveiling sweeping tariffs on numerous trade partners in April last year, the Trump administration has negotiated a series of agreements with major economies—such as Japan, South Korea, and the European Union—resulting in reduced levies in return for new investment promises across sectors including electronics, pharmaceuticals, and critical minerals.
