Trump administration nears deal with Taiwan

WASHINGTON – The Trump administration is completing a trade deal with Taiwan that would reduce tariffs on the island’s exports and commit its largest chipmaker, Taiwan Semiconductor Manufacturing Corp, to invest significantly more in the United States, according to three people familiar with the matter.

The agreement, which has been under negotiation for months, is being legally scrubbed and could be announced in January. The deal would reduce the US tariff rate to 15 per cent for goods from the island, the people said. That rate is in line with imports from Japan and South Korea, Asian allies that struck deals in 2025.

As part of the deal, TSMC would also commit to building at least five more semiconductor facilities, or fabs, in Arizona, roughly doubling the number of plants it has in the state, one of the people said. The timeline for the investments was not immediately clear. A spokesperson for TSMC declined to comment.

Since announcing tariffs on dozens of trading partners
in April 2025, the Trump administration has negotiated to reduce those rates in exchange for promises of investments and deals that fulfill US national security priorities. South Korea and Japan have pledged hundreds of billions of dollars in investments in US shipbuilding, nuclear energy, electronics and critical minerals.

With Taiwan, the Trump administration wanted the island to invest in more semiconductor manufacturing in the United States. Taiwan dominates global production of chips that are the brains of computers and the data centres needed for artificial intelligence.

But relying on the island appears increasingly risky given Beijing’s assertion that Taiwan belongs to China and should one day be brought under Chinese control. China has done live-fire drills around the island, and officials and executives worry about the possibility of an invasion disrupting the global supply chains for electronics, cars and weaponry.

TSMC, the world’s preeminent chipmaker, has completed one plant in Arizona since 2020, is completing a second, which will open in 2028, and has promised to build four more in the coming years. But as part of the U.S.-Taiwan trade talks, it agreed to add at least five more.

Since August, importers of Taiwanese products have paid a 20 per cent tariff when bringing goods into the United States. But the administration exempted semiconductors and many electronics from those tariffs, saying those sectors would be subject to separate national security tariffs issued under a legal provision known as Section 232. NYTIMES