US-Taiwan trade deal on the horizon; focus on chipmaking in United States

As per reports, the import duties would drop from the current 20% to 15%. At that level, Taiwan's shipments would be comparable to those from South...

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The Donald Trump administration is nearing a trade agreement with Taiwan that would greatly increase Taiwan Semiconductor Manufacturing Co.'s planned investment in chip production on US soil and reduce US tariffs on imports from the self-governing island.

As per reports from Bloomberg, the import duties would drop from the current 20% to 15%. At that level, Taiwan's shipments would be comparable to those from South Korea and Japan, both of which signed deals last year.

According to the reports, TSMC would commit to constructing at least four additional chip manufacturing facilities in Arizona under the terms of the agreement, in addition to the six factories and two sophisticated packaging facilities it has already committed to opening there.

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The commitments would supplement current plans for TSMC, the world's leading manufacturer of cutting-edge semiconductors used in artificial intelligence, to invest up to $165 billion in the US. TSMC has drawn more attention in Washington due to China's military actions against Taiwan.

Given that constructing a single factory can cost up to $20 billion, TSMC's extra investment would probably come close to or exceed $100 billion. The source stated that the four additional factories would be finished in the 2030s.

Requests for comment were not immediately answered by the Commerce Department, the Office of the US Trade Representative, or the White House. A request for comment from TSMC was not immediately answered, and the Taipei Economic and Cultural Representative Office in the US stated that it had nothing to say.

A signed pact would culminate months of talks between President Donald Trump’s team and the Taiwanese government, which has repeatedly said a deal was close. Taipei would secure a reduced tariff rate that aligns with the levies the US applies to imports from its neighbours, Japan and South Korea. Trump would gain another investment pledge from a major overseas manufacturer, which he could tout as another win for his trade policy.