Washington is seeking better access to the island nation’s strategic chip industry, over which China claims sovereignty.
Posted on January 16, 2026
Taiwan and the United States have reached a trade deal that will allow the island nation to boost technology and energy investments in the United States in exchange for lower tariffs.
In a statement announcing the deal late Thursday, the U.S. Commerce Department said Taiwanese technology and semiconductor companies will invest at least $250 billion in the U.S. In exchange, it said Washington will reduce its overall tariff on imports of Taiwanese goods from 20 percent to 15 percent.
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The agreement illustrates a continued effort by the United States to improve access to Taiwan’s semiconductor industry. The island nation has a dominant position in supplying chips used in advanced digital technology around the world and therefore a critical component in the global economy, but faces Chinese claims over its sovereignty.
President Donald Trump announced a 32 percent tariff on Taiwanese goods as part of his sweeping “Liberation Day” tariffs last spring, a rate he later reduced to 20 percent.
The Commerce Department said the “historic” deal “will strengthen America’s economic resilience, create good-paying jobs, and strengthen national security.”
In addition to investing $250 billion in building and expanding advanced semiconductor, energy, and artificial intelligence production and innovation capacity in the United States, Taiwan will provide at least the same amount in credit guarantees for additional investments by its companies in the U.S. semiconductor supply chain.
silicone shield
Taiwan stressed that it will continue to be the world’s leading semiconductor supplier.
The island’s chip industry has long been seen as a “silicon shield” protecting it from an invasion or blockade by China – which claims the island is part of its sovereign territory – and an incentive for the United States to defend it.
“According to current planning, Taiwan will remain the world’s largest producer of artificial intelligence semiconductors, not only for Taiwanese companies, but globally,” Economic Affairs Minister Kung Ming-hsin told reporters on Friday, the AFP news agency reported.
Production capacity for advanced chips that power artificial intelligence systems will be split 85-15 between Taiwan and the United States by 2030 and 80-20 by 2036, he projected.
Reacting to the deal, Beijing expressed its severe opposition.
“China constantly and resolutely opposes any agreement… signed between countries with which it has diplomatic relations and the Chinese region of Taiwan,” China’s Foreign Ministry spokesman said, urging Washington to respect Beijing’s one-China principle.
