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Taiwanese government seeks distinct U.S. tariff rate for semiconductors to mitigate 20% duty impact
Friday, August 1, 2025 at 08:52 AM
Taiwan's government has characterized the 20% U.S. tariff as a temporary measure and is reportedly seeking a specific, separate tariff rate for semiconductor products to mitigate the impact on the global supply chain.
Context
On March 28, 2026, the Taiwanese government is actively negotiating with the U.S. Department of Commerce to secure a specialized, lower tariff rate for semiconductors to bypass the 20% duty currently impacting most Taiwanese exports. This follows the Agreement on Reciprocal Trade signed in February 2026, which established a baseline 15% tariff for many goods but left specific semiconductor carve-outs tied to domestic production milestones. Taiwanese officials have characterized the current high duties as "temporary" while a final, distinct rate for chips is finalized.
This move is critical for TSMC, which has already pledged a massive $165 billion investment to build up to 12 fabs and a research center in Arizona. Under current framework discussions, companies that reshore manufacturing to the U.S. may receive preferential treatment, including the ability to import up to 2.5 times their planned domestic capacity tariff-free during construction. The negotiations are a response to the Trump administration's broader Section 232 investigations and the pursuit of a "50-50 split" in global chip manufacturing, a condition Taiwanese officials previously stated "goes against Taiwan-U.S. supply chain cooperation."
Sources (11)
Fact Sheet: Restoring American Semiconductor Manufacturing Leadership Through an Agreement on Trade & Investment with Taiwan | U.S. Department of CommerceFurther Modifying the Reciprocal Tariff Rates - The White HousePresidential 2025 Tariff Actions: Timeline and Status | Congress.gov | Library of CongressU.S.–Taiwan Seal $500B Semiconductor Pact to Reshore Chips and Secure Supply Chains｜Daily News Digest｜2026-01-16｜web onlyNo ‘50-50’ chips deal with US: official - Taipei TimesTaiwan's Urgent Quest to Win Over TrumpU.S.-Taiwan Trade Agreement Leaves Major Questions Open | Council on Foreign RelationsU.S. government plans tariff exemptions for TSMC, if it follows through on American investment — $165 billion already pledged to increase production capacity, but details of the deal are still murky | Tom's Hardware
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