The new trade deal between the U.S. and Taiwan is part of a larger strategy to secure the semiconductor supply chain amid escalating tensions with China. U.S. officials have highlighted the risk of economic disruption if China invades Taiwan and disrupts chip manufacturing capacity.
The U.S. aims to relocate 40% of Taiwanese semiconductor supply chain capacity onto American soil, imposing a potential 100% tariff on Taiwan-based chip producers that do not invest in the U.S. This approach signals a strong push for supply chain resilience in critical technology sectors.
Alongside investment commitments, this agreement includes tariff exemptions under the Section 232 framework for Taiwanese companies that build U.S. fabs, allowing import of components equal to 2.5 times their U.S. production capacity tariff-free during factory construction.
With the semiconductor industry at the heart of AI innovation and defense technologies, policymakers and firms alike must watch how this reshoring effort evolves and how it influences global technology competition.
