US, Taiwan reach trade deal focused on semiconductors, US Commerce Department says

WASHINGTON, Jan 15 (Reuters) – The U.S. and Taiwan clinched a trade deal on Thursday that cuts tariffs on many of the semiconductor powerhouse’s exports, directs new investments in the U.S. technology industry and risks infuriating China.

The deal deepens the Trump administration’s ties with Taipei at a critical time as China ratchets up pressure on the island and Washington has worked to avoid an all-out trade war with Beijing.

Under the long-negotiated deal, Taiwanese chipmakers like TSMC that expand U.S. production will get a lower tax rate for semiconductors they import into the U.S.

And a set of broad tariffs that apply to most other Taiwanese exports to the U.S. will be lowered, from 20% to 15%. Generic pharmaceuticals, aircraft components and “unavailable natural resources” will face a 0% tariff, the Commerce Department said.

In exchange, Taiwanese technology companies, such as TSMC, are expected to make investments totaling at least $250 billion to increase production of semiconductors, energy and artificial intelligence in the United States. That includes $100 billion already committed by TSMC in 2025, with more to come, according to U.S. Commerce Secretary Howard Lutnick.

Taiwan will also guarantee another $250 billion in credit to make additional investments possible, the Trump administration said.

(Reporting by Trevor Hunnicutt, David Lawder, Stephen Nellis, Ismail Shakil and Christian Martinez; Editing by Lisa Shumaker)