In a significant move aimed at bolstering the US semiconductor industry, the Biden administration has agreed to lower tariffs on goods from Taiwan in exchange for substantial investment pledges. The Commerce Department has revealed that Taiwanese semiconductor and technology enterprises have committed to “new, direct investments” totalling at least $250 billion (£187 billion) to boost domestic production.
The deal will see tariffs on Taiwanese goods cut from 20% to 15%, bringing them in line with the rates currently charged on imports from key US trade partners such as Japan, South Korea, and the European Union. This reduction in tariffs is seen as a crucial step in strengthening the supply chain and reducing the risk of shortages, which were exposed during the COVID-19 pandemic.
Commerce Secretary Howard Lutnick has hailed the agreement, stating that it will help the US become “self-sufficient” in semiconductor production. “We’re going to bring it all over,” he said, referring to the planned investment and expansion of the US semiconductor industry.
The Taiwanese government has also pledged to provide $250 billion in financing to support firms as part of the deal. This move is seen as a significant concession by Taiwan, which had been wary of demands to transfer its technological expertise, perceived by some as a safeguard against potential military action by China.
The announcement comes as Intel, a rival to Taiwan’s TSMC, has struggled to gain traction in the production of advanced chips designed for artificial intelligence. In a surprise move last year, the US government took a 10% stake in Intel, but the company is still set to cut thousands of American jobs in addition to those it has already slashed in recent years.
The Biden administration’s efforts to boost domestic semiconductor production have been a priority, with hundreds of billions of dollars in government subsidies being devoted to the industry. The latest trade deal is expected to further drive investment and expansion, as well as encourage smaller businesses to relocate to the US to be part of the growing supply chain.
While the Supreme Court is currently reviewing a request from businesses and states to strike down the tariffs imposed under the Trump administration, the new agreement with Taiwan suggests the Biden administration’s commitment to ensuring the resilience and self-sufficiency of the US semiconductor industry.