US Signs Trade Deal with Taiwan, Cutting Tariff Rate To 15%

The United States has entered into a new trade agreement with Taiwan, marking a significant development against the backdrop of ongoing geopolitical tensions between Taiwan and China. Under this agreement, the reciprocal tariff rate applied to Taiwan will be reduced to 15% from the previous 20% announced on April 2, 2025, during Donald Trump’s Liberation Day address.

The Taiwanese government stated that this reduced tariff will align Taiwan with Japan and South Korea, both of which attract the same rate. The deal excludes any layering of most‑favoured‑nation duties, simplifying the tariff structure for Taiwanese exporters.

Tariff Framework and Strategic Positioning

The reduction of the reciprocal tariff rate to 15% places Taiwan on par with other key US partners in the region. Taiwan’s cabinet clarified that this tariff will not be applied on top of existing most‑favoured‑nation duties, thereby ensuring simplified and more predictable tariff liabilities.

In addition, the US has capped tariffs on Taiwanese auto parts, timber, lumber and wood‑based products at the same 15% rate under the terms of this agreement. The United States has also confirmed that generic pharmaceuticals and pharmaceutical ingredients manufactured in Taiwan will attract zero tariff going forward.

Taiwanese Investment Commitments in the US

Taiwan’s technology industry has pledged to invest at least USD 250 billion directly in the United States as part of this trade deal. This figure includes the previously announced USD 165 billion commitment from Taiwan Semiconductor Manufacturing Company (TSMC).

The investment will flow into advanced semiconductor fabrication, energy collaboration and AI‑driven technologies. Taiwan has further agreed to provide USD 250 billion in credit guarantees to support continued growth in the US semiconductor supply chain.

Negotiation Background and Policy Drivers

According to US Commerce Secretary Howard Lutnick, Taiwan agreed to its investment commitments partly due to concerns over earlier discussions referencing tariff levels as high as 100%. The negotiation process ultimately resulted in a more moderate tariff structure and significant financial commitments from Taiwan.

The agreement comes at a sensitive time for Taiwan as its tensions with China continue to escalate. It also surfaces just ahead of former President Donald Trump’s planned visit to China later in April 2026.

Read More: India and Germany Near Landmark $8 Billion Submarine Deal.

Conclusion

The new US‑Taiwan trade deal marks a significant recalibration of tariff structures and investment flows between the two economies. By reducing tariffs to 15% and securing large‑scale Taiwanese commitments in semiconductor and advanced technology sectors, the agreement reflects a strategic alignment during a period of geopolitical complexity.

The developments are expected to influence trade dynamics, supply chain cooperation and diplomatic relations in the months ahead. Further clarity may emerge following pending policy decisions and upcoming diplomatic engagements.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.