OAN Staff Cory Hawkins and Brooke Mallory
6:12 PM – Friday, January 16, 2026
The Trump administration’s Department of Commerce has finalized a historic trade and investment agreement with Taiwan, aimed at reshoring the semiconductor supply chain by bringing microchip design, manufacturing, and assembly back to the United States.
Under the accord, Taiwanese firms have committed to $250 billion in direct investments to expand semiconductor, AI, and energy production in the United States. To facilitate this ecosystem, the Taiwanese government will provide an additional $250 billion in credit guarantees for its companies.
In exchange, the U.S. will cap reciprocal tariffs on most Taiwanese goods at 15%, down from the previous 20%, while applying a 0% tariff to key categories including generic pharmaceuticals, their active ingredients, aircraft components and certain essential natural resources.
This balanced approach provides greater predictability and cost relief for Taiwanese exporters, while supporting strategic U.S. priorities in supply chain security and critical industries. Furthermore, Taiwanese chipmakers that invest in U.S. facilities will also receive preferential “Section 232” status, allowing them to import critical materials duty-free based on their planned domestic production capacity.
“For the time being, we obtained the best tariff deal enjoyed by the countries with trade surplus with the U.S.,” said Taiwan Premier Cho Jung-tai. “This also shows that the U.S. sees Taiwan as an important strategic partner.”
The Commerce Department emphasized that the deal with Taiwan will establish a stronger economic partnership to create several world-class U.S.-based industrial parks to help increase domestic manufacturing.
“Our goal is to lower mutual tariffs” Cho said. “Therefore, according to the results of the negotiations, Taiwan has successfully obtained 15% in tariffs with no added fees. This is the same tariff imposed on Japan, Korea and the European Union.”
Although the Trump administration initially set tariffs on Taiwanese goods at 32% before lowering them to 20%, the new Section 232 framework introduces strategic exemptions for companies localizing chip production.
To incentivize domestic construction, Taiwanese firms may import materials duty-free at a volume of up to 2.5 times their planned production capacity while their U.S. facilities are under development.
Once these factories are operational, the duty-free allowance shifts to 1.5 times their active U.S. production capacity. This sliding scale is specifically designed to encourage industry leaders like the Taiwan Semiconductor Manufacturing Company (TSMC) to aggressively expand their manufacturing footprint on American soil.
“As a semiconductor foundry serving customers worldwide, we welcome the prospect of robust trade agreements between the United States and Taiwan,” a TSMC representative said in a statement.
Leveraging prior CHIPS Act grants, TSMC has already invested $40 billion in Arizona-based fabrication facilities to produce advanced semiconductors for industry giants like Apple and Nvidia. The Trump administration has intensified this focus on domestic manufacturing, viewing secure access to leading-edge AI chips as a critical pillar of U.S. national security and a defining geopolitical priority.
TSMC recently announced a nearly 40% increase in capital spending for the year, signaling a deeper commitment to expanding its production footprint within the United States.
The agreement was formally signed by the American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office (TECRO) — a structure that facilitates bilateral cooperation while navigating the complexities of their unofficial diplomatic relationship.
Predictably, the deal has drawn sharp condemnation from China. Officials in Beijing warned that the agreement violates the “one-China principle” and risks further destabilizing cross-strait relations by escalating regional tensions.
Nonetheless, this historic agreement essentially functions as a massive “reshoring” of the technology that powers your modern life, moving production from overseas directly onto American soil. For Americans, this means greater job security and high-wage opportunities as tens of thousands of roles are created in new “industrial parks” and semiconductor “megafabs” across states like Arizona and Texas.
It also translates to lower everyday costs.
By slashing reciprocal tariffs from 20% to 15% and eliminating them entirely on generic pharmaceuticals and aircraft parts, you should see a cooling of prices for common medications and a stabilization of costs for cars, electronics, and even air travel.
Most importantly, it provides long-term stability. By building these chips domestically, the U.S. is shielding Americans from the frustrating supply chain shortages of the past, ensuring that the tech in their phones, cars, and home appliances remais available and affordable regardless of global political tensions.
Stay informed! Receive breaking news blasts directly to your inbox for free. Subscribe here. https://www.oann.com/alerts
What do YOU think? Click here to jump to the comments!
Sponsored Content Below
