The Trump administration is closing in on a comprehensive trade agreement with Taiwan that would reduce tariffs on Taiwanese imports while securing a massive expansion of semiconductor manufacturing on American soil.
Under the proposed deal, U.S. tariffs on Taiwanese goods would drop from 20% to 15%, bringing them in line with rates applied to imports from Japan and South Korea, which reached similar agreements last year. The framework could be announced as early as this month, according to reports in the New York Times and Bloomberg. A senior Taiwanese official, speaking anonymously about the sensitive negotiations, indicated Taiwan aims to finalize the deal before Trump’s anticipated April meeting with Chinese President Xi Jinping in China.
The agreement centers on Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading producer of advanced chips used in artificial intelligence (AI) applications. TSMC would commit to building at least four additional chip manufacturing plants in Arizona, supplementing the six factories and two advanced packaging facilities already planned for the state.
The expansion would represent a staggering financial commitment. With individual fabrication plants costing upward of $20 billion each, TSMC’s additional investment could approach or exceed $100 billion, adding to existing plans for up to $165 billion in US investment. The four new facilities would be completed during the 2030s, according to one source. (Last week, TSMC spent nearly $200 million at a public auction to buy 900 acres of land next to its current Arizona property for the planned new facilities, according to a report in the Wall Street Journal.)
Taiwan’s Office of Trade Negotiations confirmed Tuesday that both sides have reached a “broad consensus” on trade issues and are coordinating a concluding meeting. Any finalized agreement would require legislative review in Taiwan.
The deal represents months of negotiations between President Trump’s team and Taiwanese officials, who have repeatedly signaled that an agreement was imminent. For Trump, the pact delivers another major investment pledge from an overseas manufacturer, reinforcing his administration’s aggressive trade policy approach. Taiwan, meanwhile, secures tariff relief that aligns with rates granted to regional competitors.
Commerce Secretary Howard Lutnick and other administration officials had previously outlined expectations for substantial additional TSMC investments in domestic chip production. The company has drawn increasing attention in Washington because of Taiwan’s precarious geopolitical position, facing military pressure from China, which claims the island as its territory.
Significant uncertainty surrounds the agreement’s implementation and benefits. Questions remain about how quickly TSMC can fulfill such an ambitious expansion of its U.S. manufacturing footprint. Additionally, the Supreme Court is expected to rule as soon as Wednesday on the legality of Trump’s global tariffs, potentially undermining a key negotiating tool the president has employed.
Since imposing sweeping tariffs on numerous trading partners last April, the Trump administration has successfully negotiated several agreements with major economies, including Japan, South Korea, and the European Union, exchanging reduced tariffs for investment commitments across electronics, critical minerals, and pharmaceuticals sectors.
