Taiwan VP declares that U.S. deal won’t erode island’s chip industry — says Section 232 tariffs won't apply, ‘the U.S. will grant Taiwan the most favorable treatment: zero tariffs within the quota’

Taiwan Vice Premier Cheng Li-chiun said that the recent U.S.–Taiwan trade deal will not erode the island’s chip industry, often considered as its “silicon shield” against potential aggression from China, which claims the island as its own, according to Reuters. The trade deal between the two partners requires Taiwanese companies to invest $250 billion in semiconductor manufacturing, energy production and distribution, and artificial intelligence research, development, and operations. Aside from that, the Taiwanese government will offer $250 billion in credit guarantees to its companies, allowing them to build or expand their presence in the United States.

The massive investment by Taiwanese companies in American research and manufacturing facilities has some people concerned that the island will lose its edge when it comes to advanced semiconductors. However, it has taken steps to ensure that its most advanced technologies remain on the island, while also refusing a proposal to move half of U.S.-bound chip production on American shores. “This is not supply-chain relocation; rather, it is support for Taiwan’s high-tech industries to extend their strength abroad — through addition, and even multiplication — to expand a strong international footprint in the United States,” Cheng told reporters.

In exchange for the $500 billion investment, the U.S. will apply zero tariffs on chips made in Taiwan that are within 2.5 times of a company’s current Stateside manufacturing capacity while they’re building their facilities. Once construction is completed, this limit will fall to just 1.5 times, but still without import taxes. As for chips that exceed the limit, Taiwan expects preferential treatment, meaning it will likely not get hit with the massive 300% tariff that U.S. President Donald Trump is considering putting on semiconductors.

“As for what the actual Section 232 semiconductor tariff will be in the future, (U.S. Commerce) Secretary Lutnick recently mentioned a possible rate of 100%, but this remains undecided. Regardless, under any future tariff scenario, we have ensured that the U.S. will grant Taiwan the most favorable treatment: zero tariffs within the quota and preferential treatment even outside the quota,” the Vice Premier said. She also added, “In the past, we said, ‘Taiwan can help.’ We hope in the future it will be ‘Taiwan-U.S. can lead,’ with the two sides joining forces, and under the wave of AI, working together to build a high-tech supply chain for the democratic camp. This is our strategic objective.”

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