The US has agreed to lower tariffs on Taiwanese goods to 15 percent from 20 percent. This is an institutional affirmation that the US regards Taiwan as an ally.
Among the countries running trade surpluses with the US, Taiwan not only succeeded in reducing tariffs to 15 percent, but also avoided them being stacked on existing most-favored-nation rates, placing them on par with Japan, South Korea and the EU. This demonstrates that Taiwan’s position within the US’ trade and economic policy is not that of a passive supply-chain participant — it is a trusted partner.
This has highly tangible implications for Taiwan’s industries. With the competitive starting points leveled, traditional sectors such as machine tools and hand tools, as well as high-tech manufacturing, are able to compete for markets under the same rules as major US allies.
An even more strategically significant outcome lies in the handling of Section 232 of the US Trade Expansion Act. Taiwan is the first country to secure the most favorable Section 232 tariff treatment for semiconductors and related products. In an environment where the US has a highly securitized and politicized semiconductor policy, this change is effectively an institutional protective umbrella. It provides predictable, systematic security for the entire semiconductor supply chain.
Particularly important is the US’ commitment that raw materials, equipment and components that Taiwanese firms require to build and operate facilities in the US would be exempt from tariffs. This impacts the key conditions shaping investment decisions, and is equivalent to laying out a pathway for the overseas expansion of Taiwan’s high-tech industries.
Another key aspect is the US’ formal acceptance and recognition of a “Taiwan model.” Rather than relying on large-scale direct government funding in exchange for political commitments, Taiwan has centered its approach on autonomous corporate investment, with the government supporting the financial system through credit guarantee mechanisms to help firms secure financing. This design respects market mechanisms and maintains fiscal discipline, while avoiding the transfer of industrial risk onto public finances.
After investment and supply chain cooperation are institutionalized, the next step rises to strategic integration. These negotiations have established a strategic partnership between Taiwan and the US in artificial intelligence and high-tech supply chains. The US needs reliable manufacturing capacity and de-risked supply chains, while Taiwan needs markets, resource and development resources, and institutional security.
President William Lai’s (賴清德) administration has accomplished not only a technical trade negotiation, but a precisely calibrated positioning amid an ongoing realignment of global blocs.
Of course, given the rapidly shifting political spectrum of US domestic politics and the potential for future policy changes, this deal is not a permanent guarantee. Maintaining this status amid such uncertainty would require careful steps. However, through signing the investment cooperation memorandum, Taiwan has entered an operational mode resembling a quasi-allied economic and trade framework.
In an era of supply chain rerouting and value clustering, being included in the core circle is more critical than any single tariff rate. Taiwan has not only negotiated conditions — it has been formally enshrined in the rules.
Hsiao Hsi-huei is a freelance writer.
Translated by Kyra Gustavsen
In the US’ National Security Strategy (NSS) report released last month, US President Donald Trump offered his interpretation of the Monroe Doctrine. The “Trump Corollary,” presented on page 15, is a distinctly aggressive rebranding of the more than 200-year-old foreign policy position. Beyond reasserting the sovereignty of the western hemisphere against foreign intervention, the document centers on energy and strategic assets, and attempts to redraw the map of the geopolitical landscape more broadly. It is clear that Trump no longer sees the western hemisphere as a peaceful backyard, but rather as the frontier of a new Cold War. In particular,
When it became clear that the world was entering a new era with a radical change in the US’ global stance in US President Donald Trump’s second term, many in Taiwan were concerned about what this meant for the nation’s defense against China. Instability and disruption are dangerous. Chaos introduces unknowns. There was a sense that the Chinese Nationalist Party (KMT) might have a point with its tendency not to trust the US. The world order is certainly changing, but concerns about the implications for Taiwan of this disruption left many blind to how the same forces might also weaken
As the new year dawns, Taiwan faces a range of external uncertainties that could impact the safety and prosperity of its people and reverberate in its politics. Here are a few key questions that could spill over into Taiwan in the year ahead. WILL THE AI BUBBLE POP? The global AI boom supported Taiwan’s significant economic expansion in 2025. Taiwan’s economy grew over 7 percent and set records for exports, imports, and trade surplus. There is a brewing debate among investors about whether the AI boom will carry forward into 2026. Skeptics warn that AI-led global equity markets are overvalued and overleveraged
Japanese Prime Minister Sanae Takaichi on Monday announced that she would dissolve parliament on Friday. Although the snap election on Feb. 8 might appear to be a domestic affair, it would have real implications for Taiwan and regional security. Whether the Takaichi-led coalition can advance a stronger security policy lies in not just gaining enough seats in parliament to pass legislation, but also in a public mandate to push forward reforms to upgrade the Japanese military. As one of Taiwan’s closest neighbors, a boost in Japan’s defense capabilities would serve as a strong deterrent to China in acting unilaterally in the
RSS