US strikes deal with Taiwan to cut tariffs, boost chip investment

TAIPEI, Taiwan — Taiwan vows to remain the world’s “most important” AI chipmaker, after reaching a trade deal with the United States that will reduce tariffs on the island’s shipments and increase Taiwanese investment on US soil.

Taiwan is a powerhouse in producing chips — a critical component in the global economy — but the United States wants more of the technology made in America.

Under the deal, Washington will lower tariffs on Taiwanese goods to 15 percent, down from a 20 percent “reciprocal” rate meant to address US trade deficits and practices it deems unfair.

Taiwan’s dominance of the chip industry has long been seen as a “silicon shield” protecting it from an invasion or blockade by China — which claims the island is part of its sovereign territory — and an incentive for the United States to defend it.

“Based on current planning, Taiwan will still remain the world’s most important producer of AI semiconductors, not only for Taiwanese companies, but globally,” Taiwanese Economic Affairs Minister Kung Ming-hsin assured reporters on Friday.

Production capacity for the advanced chips that power artificial intelligence systems will be split about 85-15 between Taiwan and the United States by 2030 and 80-20 by 2036, he projected.

China’s foreign ministry said it “resolutely opposes” the deal.