Washington: The United States and Taiwan have inked a trade and investment agreement that includes a significant reduction in U.S. tariffs on Taiwanese goods and a commitment from Taiwanese enterprises to invest a substantial US$250 billion in the United States, as announced by the Commerce Department.

According to Yonhap News Agency, the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the U.S. signed the deal, aiming to establish a strategic economic partnership that will decisively enhance U.S. domestic semiconductor supply chains. The agreement stipulates that the U.S. will lower its tariffs on Taiwanese products to 15 percent, aligning them with those applied to South Korean and Japanese goods, down from the previous 20 percent.

In exchange, Taiwanese semiconductor and technology companies will initiate new investments amounting to at least $250 billion, focusing on the development and expansion of advanced semiconductor, energy, and artificial intelligence production and innovation in the U.S. In comparison, South Korea and Japan have committed to investing $350 billion and $550 billion, respectively, under their agreements with the U.S. administration last year.

The U.S.-Taiwan deal also includes a provision that sector-specific tariffs on Taiwanese auto parts, timber, lumber, and wood-derivative products will not exceed 15 percent. These tariffs were initially implemented by President Donald Trump under Section 232 of the Trade Expansion Act of 1962, which allows the president to regulate imports if they are deemed a threat to national security.

The agreement further details that future Section 232 duties on Taiwanese semiconductors will benefit Taiwanese producers who invest in the U.S. Taiwanese companies planning new semiconductor capacity in the U.S. will be allowed to import up to 2.5 times their planned capacity without incurring sectoral duties during the construction phase. Upon completion, these companies will still be able to import 1.5 times their new production capacity duty-free.

The Commerce Department emphasized that this unprecedented commitment is expected to bolster U.S. economic resilience, generate high-paying jobs, and enhance national security.