The United States and Taiwan have reached a trade deal, lowering tariffs to 15% without any rate stacking, and secured most-favored-nation (MFN) status on semiconductors and other products – the first country to do so in US tariff negotiations. The Cabinet broke the news with a briefing Friday morning, and President Lai Ching-te (賴清德) thanked negotiators for their hard work, noting that the team achieved all four of their top goals.

In exchange for lower rates, the Taiwan government pledged to help Taiwanese companies invest US$250 billion in the United States, using credit guarantees to support local financial institutions extending financing to investing companies.

The Cabinet's negotiating team achieved four major goals, said the president. First, securing a 15% tariff rate, putting it on equal footing with Japan, South Korea, and the EU. Second, it secured most-favored status under Section 232, which will extend tax exemptions to semiconductors and related products up to a limit, while still receiving most-favored rates for anything beyond that.

The third goal was for Washington to accept the “Taiwan model” for investment in the US, allowing Taiwanese companies to follow their own investment plans, with stronger support from US institutions concerning land acquisition and water and electricity infrastructure. This, the Cabinet believes, will make it easier for Taiwanese companies to invest abroad, break into the American supply chain, and even form clusters. 

Fourth, the US companies will also invest in Taiwan, improving US-Taiwan trade collaboration. The President said, “Investment targets [for the US] include semiconductors, AI, defense industries, next-gen communications industries, and the biomedical technology industries, among others. In other words, future economic trade and cooperation will be closer; this is a win-win situation for the simultaneous development of the Taiwan and the United States economies.”

The Cabinet also clarified later Friday that the “Taiwan model” for investment is an expansion of Taiwan's tech industry and not an industry relocation.

Beyond semiconductors, tariffs on other Taiwanese products, including automobile parts, lumber, and wood derivatives, will be capped at 15%, while generic pharmaceuticals, their ingredients, aircraft parts, and some natural resources won't be tariffed at all.

While the US has agreed to the deal, it must now be passed by the Legislature to take effect domestically.