News reports about China’s Justice Mission 2025 military exercises around Taiwan are shown on a giant screen in Beijing, China, December 30, 2025.
Wang Tingju | Reuters
China has stepped up its criticism of the Taiwan-US trade deal reached last week, warning that it benefits Washington while undermining Taiwan’s industrial strength.
The trade deal lowered U.S. tariffs on Taiwanese exports to 15% and committed Taipei to billions of dollars in additional investment in the United States.
Peng Qing-keun, a spokesperson for the China-Taiwan Affairs Office, said on Wednesday that the deal “will only dry up Taiwan’s economic benefits” and accused Taiwan’s ruling Democratic Progressive Party of having the United States “hollowing out” Taiwan’s key industries. According to CNBC’s Mandarin translation of his remarks:
The Chinese government said last week that China “firmly opposes” agreements between Taiwan and countries that maintain diplomatic relations with China, and called on the United States to abide by the “one China principle.”
China regards democratically-ruled Taiwan as its own territory, and Chinese President Xi Jinping views unification with the mainland as a “historical necessity.” Taiwan rejects these claims.
Taiwanese companies plan to make $250 billion in direct investments in the United States to build and expand technology businesses, including chips and AI. The Taiwanese government also pledged to guarantee $250 billion in credits to Taiwanese chip and technology companies to further expand their production capacity in the United States.
Taiwanese companies will also enjoy expanded duty-free import quotas for chips to the United States.
In return, Washington will reduce tariffs on most goods from Taiwan from 20% to 15% and waive duties on generic drugs and their ingredients, aircraft parts and natural resources not available domestically.
Commerce Secretary Howard Lutnick told CNBC on Thursday that the goal is to bring 40% of Taiwan’s entire semiconductor supply chain to the United States.
Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker, has already committed to investing $165 billion in chip manufacturing and processing facilities and research and development laboratories in the United States. The company reportedly plans to build four to six more factories, bringing the total to more than 10.
The Chinese government claimed on Wednesday that labor costs at TSMC’s U.S. factory are more than double those at its Taiwanese factory, and said the U.S. is “using Taiwan to contain China.”
TSMC did not immediately respond to CNBC’s request for comment.
“The Democratic Progressive Party wants TSMC to significantly increase investment in the United States and create so-called high-wage jobs for Americans, but that will only destroy the foundation of the island’s industry,” Peng said.
Experts say the deal is unlikely to completely wean Washington from Taiwan’s cutting-edge semiconductors anytime soon, as Taipei remains committed to keeping cutting-edge technology at home.
Asked about Mr. Lutnick’s remarks, Taiwan’s Vice Premier Cheng Li Chi-yun said the U.S. goal of achieving 40% domestic chip independence as a national security priority does not depend on Taiwan alone, adding that U.S. semiconductor giants and other countries are also participating in the plan.
Taiwan dominates global chip production, and TSMC produces most of the world’s advanced chips. It is estimated that nearly one-third of the world’s demand for new computing power is met in Taiwan.
The island’s central role in the global semiconductor supply chain makes maintaining its de facto autonomy from Chinese attack a strategic priority for the United States and its allies.
The deal deepens the Trump administration’s ties with Taipei as China gradually increases pressure on the city.
