U.S. Government Reaches Trade Deal With Taiwan

As Supply Chain Dive reported, the U.S. government has reached a trade deal with Taiwan. The Trump administration did not offer a timeline for implementation of the deal, however.

According to The New York Times, Taiwan has one of the largest trade deficits with the United States. Semiconductor chips and electronics account for 90 percent of the gap. As The Times also noted, “Taiwan is also a major supplier of steel products to the United States, especially metal fasteners such as screws and bolts.”

The agreement calls for:

• The Trump administration to lower its tariff rate on Taiwanese goods to 15 percent from 20 percent. The 15 percent cap would apply to both reciprocal duties on goods from Taiwan and sector-specific levies, including those on auto parts. (More specifically, the U.S. Department of Commerce fact sheet says, “The U.S. Section 232 duties applied to Taiwanese auto parts, timber, lumber, and wood derivative products will total no more than 15 percent.” Note: the fact sheet does not mention steel and aluminum Section 232 tariffs.)
• The U.S. government to allow Taiwanese companies that have built or are building semiconductor facilities to import a certain amount of semiconductor chips, proportional to their U.S. production capacity, without paying the 15 percent duty.
• The Taiwanese government to compel its semiconductor and technology enterprises to make $250 billion in direct investments to build and expand advanced semiconductor, energy, and artificial intelligence production in the United States.
• Taiwan’s government to provide $250 billion in credit guarantees that would allow smaller Taiwanese semiconductor firms to expand in the United States.

This fact sheet from the U.S. Department of Commerce has more information. The agreement with Taiwan on semiconductors came the same week that the U.S. government imposed new Section 232 tariffs on imports into the United States of semiconductors. Read more about that policy at this link.