WASHINGTON (Diya TV) — The United States and Taiwan have reached a major trade agreement aimed at expanding semiconductor manufacturing on American soil. The deal is designed to strengthen U.S. chip production, reduce supply chain risks, and ease tariff pressure on Taiwanese companies that invest in the United States. The Department of Commerce announced the agreement on Thursday. It comes as global demand for advanced chips surges due to artificial intelligence, electric vehicles, and national security concerns.
Under the agreement, Taiwanese chip and technology companies will invest at least $250 billion to build and expand production capacity in the United States. The Taiwanese government will also guarantee up to $250 billion in credit to support these investments.
In return, the United States will cap reciprocal tariffs on Taiwan at 15%, down from 20%. The U.S. will also impose zero reciprocal tariffs on generic pharmaceuticals, drug ingredients, aircraft components, and certain natural resources. Commerce officials said the deal offers long-needed clarity for companies navigating shifting U.S. tariff policies in the semiconductor industry.
The agreement includes key incentives for companies that build chip factories in the U.S. Officials said future tariffs under the Section 232 framework will include exemptions for firms constructing semiconductor facilities on American soil.
While factories are under construction, eligible companies may import up to 2.5 times the production capacity they are building without paying Section 232 tariffs. Once factories are complete, companies may import up to 1.5 times their U.S. production capacity without tariffs. The deal also protects Taiwanese auto parts, lumber, and related products from tariffs above 15%. Commerce Secretary Howard Lutnick said the goal is clear. The U.S. wants chip makers to invest locally.
Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, stands at the center of the agreement. Lutnick told CNBC that TSMC has purchased hundreds of acres of land next to its existing property in Arizona.
“They just bought hundreds of acres adjacent to their property,” Lutnick said. He added that TSMC will review plans with its board before announcing next steps.
TSMC already operates chip factories in Arizona and has invested up to $40 billion in the state. The company produces chips for major U.S. customers such as Apple and Nvidia. Those projects received funding through the CHIPS and Science Act. A TSMC spokesperson said demand for its advanced technology remains strong. The company said it continues to invest in Taiwan while expanding overseas based on customer needs and market conditions.
Lutnick issued a sharp warning to companies that choose not to build in the U.S. He said Taiwan-based chip companies that refuse to invest in American factories could face tariffs as high as 100%.
“That’s what they get if they don’t build in America,” Lutnick said.
He said the U.S. government aims to move 40% of Taiwan’s semiconductor supply chain to the United States. Officials view that shift as critical to economic and national security.
U.S. leaders have pushed domestic chip production as competition over artificial intelligence hardware intensifies. Advanced semiconductors now play a central role in economic growth, defense systems, and global power.
Officials have also raised concerns about the risk of a Chinese invasion of Taiwan. Such a move could disrupt access to chips made by TSMC, which supplies many of the world’s most advanced processors. The Commerce Department said the new agreement allows TSMC to keep manufacturing chips in Taiwan for U.S. companies while expanding its American footprint.
Lutnick said the broader objective is U.S. self-reliance.
“We’re going to bring it all over so we become self-sufficient in the capacity of building semiconductors,” he said.
Industry analysts expect the deal to reshape global semiconductor trade. It also signals a tougher U.S. stance on tariffs paired with strong incentives for domestic investment. For American consumers and businesses, the agreement could mean more stable chip supplies, stronger manufacturing jobs, and reduced exposure to global disruptions.
