The Trump administration is approaching completion of a trade agreement with Taiwan that would reduce tariffs on Taiwanese imports to 15% from the current 20% rate, and trigger significant new investment in semiconductor manufacturing by Taiwan Semiconductor Manufacturing Company (TSMC) in the US, Bloomberg reports.
As part of the developing deal, TSMC is expected to commit to constructing at least five additional semiconductor plants in Arizona. The Taiwanese chip company already operates one fab in the state, is constructing a second (which is due to open in two years), and had already committed to building four more plants, according to The New York Times.
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The company’s overall investment in its US operations could reach or exceed $100bn, given that constructing a single facility may cost over $20bn.
The planned opening of these extra factories is projected for the 2030s.
Negotiations have been ongoing for several months between representatives of President Donald Trump’s administration and officials in Taipei.
The parties have reached broad consensus on key trade matters, according to a statement from Taipei’s Office of Trade Negotiations, which noted that discussions continue regarding the timing of a concluding meeting before sending the agreement to Taiwan’s legislature for review.
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By GlobalDataThe proposed trade arrangement follows previous deals negotiated by the Trump administration with countries such as Japan and South Korea, which involved reductions in tariffs in exchange for investment commitments across various sectors, including electronics and critical minerals.
The US authorities have excluded semiconductors and many electronics from general tariffs imposed on Taiwanese goods, opting instead for separate national security-related levies that are still under review.
Administration officials indicated that companies increasing domestic US manufacturing output may not be subject to these national security tariffs under Section 232 provisions, though final details remain unsettled.
TSMC has completed one production plant in Arizona since 2020 and is finishing a second facility scheduled to open in 2028.
The company has acquired further land parcels as it prepares for expansion aligned with its US investment obligations under the new agreement.
Trade talks between Washington and Taipei have occurred amid heightened attention over Taiwan’s role in global chip supply chains, particularly as tensions persist between Taiwan and China.
Any formal trade agreement carries geopolitical considerations due to China’s position on Taiwan’s status.
Taiwanese officials have sought to conclude discussions ahead of an anticipated meeting between President Trump and Chinese leader Xi Jinping scheduled for April in China.
The outcome of the Supreme Court’s forthcoming ruling on the legality of Trump-era global tariffs may also influence the final implementation of any agreement.
Since April last year, the US has adjusted its approach toward tariff policy by pursuing individual deals with major economies linked to reciprocal investment undertakings.
The process resulted in revised arrangements with partners such as Japan, South Korea and members of the European Union.
Semiconductors represent more than one-third of Taiwan’s exports, with TSMC responsible for producing a significant portion used worldwide in technology applications, including AI, according to The New York Times.
