U.S.–Taiwan Chip Pact Cuts Tariffs and Pledges $500 Billion Toward U.S. Production

Overview

• Washington will lower reciprocal tariffs on Taiwanese goods to 15% from 20%, with auto parts and wood capped at 15% and exemptions for generic medicines and some natural resources.
• Taiwanese chip and tech firms committed at least $250 billion in new U.S. investments, backed by $250 billion in Taiwan credit guarantees to support broader supply-chain expansion.
• The United States pledged help securing land, utilities, infrastructure, tax incentives and visa programs for Taiwanese investors building facilities in the country.
• Commerce Secretary Howard Lutnick set a target to shift 40% of Taiwan’s chip supply chain to the U.S., with temporary construction allowances letting new fabs import up to 2.5 times planned capacity tariff-free, dropping to 1.5 times after completion.
• TSMC outlined record 2026 capex of $52–56 billion and faster U.S. buildout, including equipment installation at its second Arizona fab with production aimed for the second half of 2027, while Beijing publicly opposed the agreement.