U.S. and Taiwan Sign Landmark Trade Deal — Slashing Tariffs, Securing Chips, and Sending a Signal to Beijing
The United States and Taiwan finalized a sweeping trade agreement on Thursday that cuts tariffs on Taiwanese exports to 15%, secures hundreds of billions of dollars in semiconductor and AI investments on American soil, and opens Taiwan's markets to U.S. agricultural and industrial goods. The deal, signed by U.S. Trade Representative Jamieson Greer, Commerce Secretary Howard Lutnick, and senior Taiwanese officials, represents one of the most significant economic agreements of the Trump administration's second term — and one with profound geopolitical implications across the Indo-Pacific. The agreement addresses a trade imbalance that ballooned to nearly $127 billion through the first 11 months of 2025, driven overwhelmingly by Taiwan's dominance in advanced semiconductor manufacturing. In exchange for the lower tariff rate — which brings Taiwan in line with allies Japan and South Korea — Taipei has committed to removing or reducing 99% of its tariff barriers on American goods and purchasing over $84 billion in U.S. products through 2029, including liquefied natural gas, crude oil, civil aircraft, and power equipment. But the deal is far more than a tariff adjustment. It is a strategic realignment that intertwines America's AI ambitions with Taiwan's chip-making prowess, while drawing an implicit line in the sand against China's territorial claims over the island. Beijing has already condemned the arrangement, warning that it will "hollow out" Taiwan's key industries and "drain" its economic interests.