The United States and Taiwan on Thursday reached a new trade agreement aimed at reshoring semiconductor manufacturing and strengthening U.S. supply chains, according to the Department of Commerce.

The deal commits Taiwanese semiconductor and technology companies to at least $250 billion in direct U.S. investment to advance “America First trade and investment” with an additional $250 billion in credit guarantees to support expansion across the industry’s supply chain in the U.S.

American and Taiwanese officials say the agreement is designed to reverse decades of offshoring that cut America’s share of global semiconductor fabrication from 37% in 1990 to under 10% in 2024.

The framework also establishes U.S.-based industrial parks and sets tariff rules, capping U.S. tariffs on Taiwanese auto parts, timber, lumber and wood derivative goods at 15%.

It also zeroes out reciprocal tariffs on select items like pharmaceuticals, aircraft components and unavailable natural resources.

Future U.S. semiconductor tariffs will reward Taiwanese companies that build production in the United States, allowing duty-free imports tied directly to new U.S. manufacturing capacity.

Taiwanese firms that build new U.S. semiconductor capacity will be permitted to import up to 2.5 times that planned capacity without paying tariffs during the construction period, while also receiving a lower preferential tariff rate for above-quota imports.

Additionally, Taiwanese companies that have completed new chip production projects in the U.S. will still be able to import 1.5 times their new U.S. production capacity without paying tariffs.

The terms of the trade deal will see Taiwan facilitate U.S. investment into several key Taiwanese industries, including semiconductors, artificial intelligence (AI), defense technology, telecommunications and biotechnology industries.

Source: Foxbusiness