Under US President Donald Trump’s push to “make America great again” and pursue an “America first” strategy, Taiwan and the US reached a trade agreement that includes a 15 percent tariff without stacking on existing most-favored nation rates. Also included was favorable treatment for semiconductors and related products under Section 232, and mutual investment and cooperation — based on a “Taiwan model” — to jointly develop high-tech industrial parks in the US.
Taiwan has the opportunity to build a closer bilateral relationship with the US through mutually beneficial trade exchanges and high-tech industrial cooperation. This would not only contribute to Taiwan’s economic growth, but also strengthen Taiwan-US strategic ties, thus enhancing Taiwan’s capacity to safeguard itself while resisting China.
As Trump began his second term, he promoted policies aimed at making the US great again. On the domestic front, Trump strengthened US manufacturing, created jobs and boosted economic growth. The semiconductor industry has played a particularly critical role in this, as leading US technology firms — such as Apple Inc, Nvidia Corp, Alphabet Inc, Advanced Micro Devices Inc and Qualcomm Inc — all rely on Taiwan Semiconductor Manufacturing Co (TSMC) for chip supply. In regards to foreign policy, Trump adhered to his “America first” principle, pursuing a realist diplomatic strategy, strengthening US political and economic interests through comprehensive cooperation with democratic countries in energy, high tech, trade, geostrategy and military affairs.
Following its rise in recent years, China has continuously expanded its military capabilities in the South China Sea, the East China Sea and the Taiwan Strait, thereby undermining peace and stability in the Indo-Pacific region and hindering US interests. Taiwan is a critical hub in the US’ strategy to counter China, and as Beijing pursues military expansion and seeks to compete with the US for hegemony — thereby intensifying US-China confrontation — Washington has strengthened arms sales to Taiwan, and increased bilateral military training and cooperation.
It has also sought to revitalize its domestic economy and reinforce its high-tech manufacturing and defense industries to leave a rapidly advancing China behind. Thus, the US has reached agreements favorable to Taiwan’s exports by decreasing tariffs to 15 percent with no stacking.
Furthermore, while supporting land, labor, water and electricity supply as well as providing tariff exemptions, the US hopes that TSMC would build five more factories on US soil. This move would not only help the US establish a complete semiconductor supply chain, develop high-tech parks, promote reindustrialization and achieve the goal of making the country “great again,” but would also strengthen the defense industry, provide more advanced weapons to Taiwan, enhance Taiwan’s ability to resist China and consolidate US interests in the western Pacific.
The US is TSMC’s largest market globally. As its existing capacity is already fully utilized, TSMC has increased investment and expanded its fabrication facilities in the US to meet market demand — all while adhering to the principle of not allowing advanced process technologies to be transferred overseas. Taiwan hosts a dense cluster of wafer fabs, and it is estimated that the capacity produced from US expansion would account for only about one-10th of TSMC’s overall global capacity. This would not affect TSMC’s expansion in Taiwan, which includes the addition of 12 fabs and the manufacturing of advanced chips.
This Taiwan-US trade agreement tightly links security relations with economic and trade interests. By deeply embedding Taiwan’s semiconductor industry into the US domestic supply chain, Taiwan’s survival and the US’ technological leadership in areas such as artificial intelligence and military chips have become a shared destiny. This mutually beneficial relationship strengthens Taiwan’s overall economic resilience and provides it with more substantial trade leverage to secure US support amid military threats from China. This represents a successful case of transforming the Taiwan experience into global strategic value. Taiwan is forging a distinctive path of partnership that differs from that of other countries through substantive mutual benefits pursued in Trump’s realist diplomacy.
Michael Lin is a retired diplomat formerly posted in the US.
Translated by Kyra Gustavsen
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