Flags of the United States and Taiwan are seen in San Francisco, California on January 28, 2026.
Stephen Nellis | Reuters
Washington and Taipei have signed a trade deal that lowers tariffs on Taiwanese exports to 15%, on par with Asian allies Japan and South Korea, and opens Taiwan to American goods.
Taiwan will eliminate or reduce 99% of tariff barriers on U.S. products and provide “priority market access” for U.S. industrial and agricultural exports. These include automobiles, beef products, and minerals.
Taiwan also plans to purchase more than $84 billion in U.S. products from 2025 to 2029, including liquefied natural gas, crude oil, aircraft and power equipment.
The Office of the U.S. Trade Representative said it is working to “resolve long-standing non-tariff barriers,” including Taiwan’s acceptance of U.S. vehicles manufactured in accordance with U.S. federal motor vehicle safety standards without additional requirements.
The agreement was first announced in January when Taiwanese chip technology companies pledged to invest at least $250 billion in U.S. production capacity, backed by a matching government credit “to encourage additional investment by Taiwanese companies.”
However, Taiwan and the United States share different views on the chip supply chain.
Commerce Secretary Howard Lutnick told CNBC last month that his goal is to bring 40% of Taiwan’s entire semiconductor supply chain to the United States during his tenure as U.S. president. He also said 100% tariffs would likely be imposed on Taiwan-based semiconductor companies that do not manufacture in the United States.
But Taiwan rejected that proposal, telling Washington that it was “impossible” to move 40% of Taiwan’s semiconductor supply chain to the United States, according to Taipei’s top customs and trade negotiator.
Deputy Prime Minister Cheng Li-Chiun told local media that Taiwan’s semiconductor ecosystem, which has been built over decades, cannot simply be transferred.
In Chinese, translated by CNBC, he said Taiwan’s international expansion, including investment in the United States, is based on the idea that industry will continue to take root in Taiwan and continue to expand domestic investment.
China, which considers democratically-ruled Taiwan to be part of its territory, criticized the January deal, saying it would “only dry up Taiwan’s economic benefits,” adding that the ruling Democratic Progressive Party was allowing the United States to “hollow out” Taiwan’s key industries.
Chinese President Xi Jinping believes that the unification of Taiwan and the mainland is a “historical necessity.” Taiwan rejects these claims.
Although the United States does not have a mutual defense treaty with Taiwan and is not obligated to defend Taiwan, the Taiwan Relations Act of 1979 stipulates that the United States will “provide Taiwan with defense supplies and defense services” necessary to “enable Taiwan to maintain an adequate self-defense capability.”
In December, the United States approved an $11.15 billion arms sale to Taiwan, one of its biggest deals in the face of growing threats from China, prompting a sharp reaction from Beijing, with foreign affairs spokesman Guo Jia-kun accusing the United States of violating the “one China principle.”
—CNBC’s Anniek Bao and Dylan Butts contributed to this article.
