The U.S. government is seeking improved access to the strategic semiconductor industry in the island nation, which China claims sovereignty over.
Published January 16, 2026
Taiwan and the United States have signed a trade agreement that allows Taiwan to increase its technology and energy investments in the United States in exchange for lower tariffs.
Taiwanese semiconductor and technology companies will invest at least $250 billion in the United States, the U.S. Department of Commerce said in a statement late Thursday announcing the deal. In return, the US government announced that it would reduce general tariffs on imports of Taiwanese products from 20% to 15%.
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This agreement demonstrates the United States’ continued push to improve access to Taiwan’s semiconductor industry. The island nation, which holds a dominant position in the supply of chips used in advanced digital technologies around the world and is therefore a key component of the global economy, faces Chinese claims over its sovereignty.
President Donald Trump announced last spring that he would impose a 32% tariff on Taiwanese goods as part of his sweeping “Emancipation Day” tariffs, but later lowered the rate to 20%.
The Commerce Department said the “historic” agreement “strengthens the resilience of the U.S. economy, creates good-wage jobs, and strengthens national security.”
In addition to investing $250 billion to build and expand advanced semiconductor, energy, and artificial intelligence production and innovation capabilities in the United States, Taiwan will provide credit guarantees of at least the same amount for additional investments by its companies in the U.S. semiconductor supply chain.
silicon shield
He emphasized that Taiwan will continue to be a major supplier of semiconductors to the world.
The island’s semiconductor industry has long been seen as a “silicon shield” protecting the island from invasion or blockade by China, which claims it is part of its sovereign territory, and an incentive for the United States to defend it.
“Based on the current plan, Taiwan will continue to be the world’s most important AI semiconductor producer, not only for Taiwanese companies but also for the world,” Economic Affairs Minister Kun Mingxin told reporters on Friday, according to AFP news agency.
He predicted that production capacity for advanced chips that power artificial intelligence systems would be split approximately 85:15 between Taiwan and the United States by 2030, and 80:20 by 2036.
The Chinese government expressed its firm opposition to this agreement.
“China consistently and resolutely opposes any agreement concluded between countries with diplomatic relations and China’s Taiwan region,” a spokesperson for the Chinese Foreign Ministry said, calling on the United States to abide by Beijing’s “one China” principle.
