The US has agreed to lower tariffs on Taiwanese goods from 20 percent to 15 percent, without stacking them on existing most-favored-nation (MFN) rates, the Executive Yuan said in a statement today.
The agreement, reached in trade negotiations that concluded yesterday in Washington, also grants semiconductors and related products the most favorable treatment under Section 232 of the Trade Expansion Act, the Cabinet said.
Photo: AFP
It also includes commitments to expand supply chain investment cooperation and deepen Taiwan-US strategic collaboration on artificial intelligence, according to the statement.
The new tariff rate of 15 percent matches US rates on goods from major trade partners such as Japan, South Korea and the EU.
As part of the agreement, Taiwanese semiconductor, electronics manufacturing service (EMS), artificial intelligence and energy companies would invest US$250 billion in the US based on their own plans, the Cabinet statement said, although no timetable was given.
At the same time, Taiwan's government has also agreed to provide up to US$250 billion in credit guarantees for financial institutions to support investments in the US market by the semiconductor and information and communication technology sectors, the statement said.
On Monday, the New York Times reported that Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) would commit to building at least five more fabs in exchange for a possible reduction in . tariffs on Taiwanese goods.
TSMC chairman and CEO C.C. Wei (魏哲家) did not directly respond to the report at an investor conference yesterday, but he said his company was "speeding up" its capacity expansion in the US to satisfy client needs.
With the deal, Taiwan has become the first country in the world to secure the most favorable treatment for its semiconductor and related product suppliers, which should significantly ease uncertainties for the local semiconductor industry, the Cabinet statement said.
The US has also pledged to grant most favorable status to Taiwanese semiconductor firms when they import raw materials, equipment and electronics components for their US operations, the statement said, without elaborating.
According to the Cabinet, Washington has recognized and accepted a "Taiwan model" that Taipei proposed to allow Taiwanese companies to follow their own plans for investing in the US and moving closer geographically to their US clients.
The "Taiwan model" is expected to encourage Taiwanese companies to enter the supply chain in the US market and build industrial clusters there, the Cabinet said.
Taiwan has the sixth-biggest trade surplus with the US of any country in the world, and about 90 percent of that is from sales of semiconductors, information and communications products, and electronic components, the statement said.
In a separate statement, the US Department of Commerce described the arrangement as "a historic trade deal that will drive a massive reshoring of America's semiconductor sector" and "strengthen US economic resilience, create high-paying jobs and bolster national security."
Beyond the tech sector, the reduction of the import duty on Taiwanese goods imported to the US to 15 percent without stacking them on existing MFN rates should help make Taiwan's non-tech sectors more competitive, as they would now be on an equal footing with Japan, South Korea and the EU, the Cabinet said.
Taiwan has also secured the most favorable treatment for other items such as auto parts, wooden furniture and aircraft components under Section 232, and Taipei and Washington have agreed to set up a negotiation mechanism under Section 232.
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