U.S.-TAIWAN SEMICONDUCTOR TRADE AND INVESTMENT AGREEMENT

A new U.S.-Taiwan trade and investment agreement outlines a framework for how future Section 232 duties on Taiwanese semiconductors may be applied in connection with new U.S. manufacturing capacity. The Department of Commerce statement links investment commitments and construction-stage capacity milestones to preferential Section 232 treatment, including defined import thresholds during facility buildout and after production projects are completed. For semiconductor manufacturers and component importers, the capacity thresholds described in the agreement are likely to matter as new U.S. facilities are built and brought online.

The agreement outlines how Taiwanese semiconductor producers that invest in the United States may receive preferential Section 232 treatment tied to U.S. capacity expansion. Specifically, companies building new U.S. semiconductor capacity may import up to 2.5 times planned capacity without paying Section 232 duties during the approved construction period, with a lower preferential Section 232 rate for above-quota imports. After completion of new U.S. chip production projects, companies may still be able to import up to 1.5 times their new U.S. production capacity without paying Section 232 duties.

The Department of Commerce Fact Sheet identifies a sustained decline in U.S. semiconductor manufacturing share over several decades, with domestic wafer fabrication declining from 37 percent in 1990 to less than 10 percent in 2024. It also states that most semiconductors are fabricated in East Asia. The agreement is positioned as a mechanism to support investment in U.S.-based manufacturing capacity and related infrastructure.

Taiwanese semiconductor and technology enterprises will make new direct investments totaling at least $250 billion to build and expand advanced semiconductor, energy, and artificial intelligence production and innovation capacity in the United States. Taiwan will also provide credit guarantees of at least $250 billion to facilitate additional investment by Taiwanese enterprises, supporting the establishment and expansion of the full semiconductor supply network in the United States.

The agreement calls for the United States and Taiwan to establish industrial parks in the United States intended to strengthen industrial infrastructure and support next-generation technology, advanced manufacturing, and innovation. It also states that Taiwan will facilitate U.S. investment in Taiwanese semiconductor, artificial intelligence, defense technology, telecommunications, and biotechnology industries to expand market access and deepen technological collaboration.

The agreement states that the U.S. reciprocal tariff rate applied to Taiwanese goods will total no more than 15 percent. It also states that U.S. Section 232 duties applied to Taiwanese auto parts, timber, lumber, and wood derivative products will total no more than 15 percent. The United States will apply a zero percent reciprocal tariff for generic pharmaceuticals, their generic ingredients, aircraft components, and unavailable natural resources

The agreement outlines preferential Section 232 treatment tied to new U.S. semiconductor capacity. It does not replace or restate the separate Section 232 measures already in effect for covered semiconductor articles. Under the agreement framework, Taiwanese companies building new U.S. semiconductor capacity may import up to 2.5 times planned capacity without paying Section 232 duties during the approved construction period, with a lower preferential Section 232 rate for above-quota imports. After completion of new U.S. chip production projects, companies may import up to 1.5 times their new U.S. production capacity without paying Section 232 duties.

The agreement describes an investment-linked structure for future Section 232 treatment of Taiwanese semiconductors, including import thresholds tied to planned capacity during construction and production capacity after project completion. Importers should track whether their Taiwanese suppliers are pursuing qualifying U.S. capacity projects and the associated construction or completion status, since the thresholds in the agreement are defined around those milestones.