$250 Billion Chip Alliance: US and Taiwan Reach Massive Trade Agreement
The US and Taiwan have reached a historic $250 billion trade deal to localize chip manufacturing. Discover how TSMC and the 15% tariff cap will reshape the industry.
The U.S. semiconductor map is being redrawn. On January 15, 2026, the Department of Commerce announced a landmark trade agreement with Taiwan, securing at least $250 billion in investments to build chips and factories on American soil. This deal marks a significant shift in global supply chain strategy, prioritizing domestic production for national security.
Key Terms of the US Taiwan $250B Chip Trade Deal
Under the deal, Taiwanese tech giants will inject $250 billion into U.S. manufacturing capacity, backed by an equivalent amount of credit guarantees from the Taiwanese government. In return, the U.S. will slash reciprocal tariffs on Taiwan from 20% to 15%. Furthermore, the agreement commits to zero reciprocal tariffs on essential items like generic pharmaceuticals, aircraft components, and specific natural resources.
| Category | Agreement Detail |
|---|---|
| Total Investment | At least $250 Billion |
| Tariff Reduction | 20% capped at 15% |
| Import Quotas | Up to 2.5x capacity during fab construction |
| Supply Chain Goal | 40% of Taiwan's supply chain to the US |
Expansion of TSMC and the 100% Tariff Ultimatum
Commerce Secretary Howard Lutnick revealed that TSMC has already purchased hundreds of acres adjacent to its Arizona property for potential expansion. However, the deal comes with a sharp ultimatum: firms that don't build in America face a potential 100% tariff. "We're going to bring it all over so we become self-sufficient," Lutnick stated during an interview with CNBC, emphasizing the goal of moving 40% of the supply chain to U.S. shores.
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