• The US and Taiwan signed a trade agreement cutting tariffs and boosting US goods purchases.
• The deal updates previous agreements to include a 15% US tariff on Taiwanese imports.
• Taiwan commits to $250 billion in investments towards US industries, including semiconductors.
• Immediate tariff reductions include a cut for many agricultural imports from Taiwan up to 26%.
• The trade deficit with Taiwan has increased significantly, largely due to imports of AI chips.

Officials from the Trump administration finalized a reciprocal trade agreement with Taiwan that introduces a 15% US tariff rate for imports from Taiwan. This agreement commits Taiwan to a comprehensive schedule aimed at either eliminating or lowering tariffs on almost all US goods. The agreement is part of an ongoing effort to strengthen economic ties and enhance supply chain resilience in high-technology sectors, especially critical as US imports from Taiwan surged in recent years, leading to significant trade imbalances, such as a deficit of nearly US$127 billion in 2025 according to the Census Bureau, according to Reuters, SCMP, and Channel News Asia.

The finalized agreement follows an earlier commitment by Taiwan to invest $250 billion in US industries, which includes plans for boosting semiconductor production significantly. Notably, Taiwan Semiconductor Manufacturing Corp (TSMC) is poised to contribute around $100 billion towards these investments. The agreement not only aims to cut tariffs but also seeks to eliminate non-tariff barriers allowing better access for US goods in Taiwan, highlighting the intent to forge a deeper economic relationship amid rising tensions with China, according to Reuters and SCMP.

Furthermore, under the new agreement, Taiwan will eliminate tariffs of up to 26% on a range of US agricultural imports, including beef and dairy products. However, certain other tariffs on goods such as pork are set to decrease only partially. US Trade Representative Jamieson Greer indicated that this agreement is crucial for boosting export opportunities for various sectors of the US economy, enhancing the resilience of supply chains across high-tech and agricultural industries, according to Channel News Asia and SCMP.