US-Taiwan Trade Pact 2026: Tariff Reductions and TSMC Investment
On Jan 13, 2026, Taiwan and the US reached a consensus on the US-Taiwan Trade Pact, cutting tariffs to 15% as TSMC expands its Arizona investment to $165 billion.
Trading chips for survival. Taiwan and the United States have reached a "general consensus" on a trade deal that would slash tariffs on Taiwanese exports in exchange for a massive expansion of TSMC's manufacturing footprint on American soil. As of January 13, 2026, officials in Taipei confirmed that the months-long negotiation has finally yielded a framework to stabilize trade ties under the Trump administration's reciprocal tariff policy.
The US-Taiwan Trade Pact 2026 and the 15% Tariff Deal
According to reports from Bloomberg and the New York Times, Taiwan's tariff rate will be lowered to 15%. This is a significant drop from the 32% "reciprocal tariff" initially announced in April 2025, which was later adjusted to 20% in August. The deal mirrors similar arrangements made by Japan and South Korea, who pledged billions in investments to secure tariff relief.
| Country | Investment Pledge | New Tariff Rate |
|---|---|---|
| Japan | $550bn | 15% |
| South Korea | $350bn | 15% |
| Taiwan | $165bn (Total TSMC) | 15% |
TSMC’s $165 Billion Arizona Bet
The centerpiece of the agreement is TSMC's commitment to build at least four more production facilities in Arizona. This brings the chipmaker's total US investment to $165 billion. The US Defense Department and other agencies have been pushing for this geographic diversification to mitigate risks of a potential China blockade that could paralyze the global tech economy.
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