U.S. Commerce Secretary Howard Lutnick speaks after U.S. President Donald Trump introduced a $100 billion U.S. funding by Taiwan Semiconductor Manufacturing Firm (TSMC) within the Roosevelt Room of the White Home, in Washington, DC, USA, March 3, 2025. EPA-Yonhap
HONG KONG — The US and Taiwan reached a commerce deal Thursday that cuts tariffs on Taiwanese items in change for $250 billion in new investments within the U.S. tech trade.
The deal is the most recent President Donald Trump has struck — comparable to these with the European Union and Japan — since he unveiled a sweeping tariff plan final April to handle commerce imbalances. Trump additionally has a one-year commerce truce with China to stabilize ties with the world’s second largest financial system.
Trump initially set the tariff at 32 p.c on Taiwanese items however later modified it to twenty p.c. The brand new settlement slashes the tariff fee to fifteen p.c, the identical as levied on different U.S. buying and selling companions within the Asia-Pacific area comparable to Japan and South Korea.
In an announcement, the U.S. Division of Commerce stated the take care of Taiwan would set up an “financial partnership” to create a number of “world-class” U.S.-based industrial parks with a view to assist construct up home manufacturing. The division described it as “a historic commerce deal that may drive a large reshoring of America’s semiconductor sector.”
The Taiwanese authorities affirmed key particulars within the deal in an announcement, saying that the “Taiwan mannequin” will go to the U.S. and assist broaden the worldwide competitiveness of the island’s know-how trade whereas deepening strategic cooperation between the 2 nations.
Taiwan’s govt department stated the island’s firms would particularly make investments $250 billion in industries comparable to semiconductors, synthetic intelligence functions and vitality.
Along with chopping the tariffs on the island nation, the Commerce Division stated it’s going to exempt sure imports comparable to generic prescribed drugs and plane parts from Taiwan. Taiwanese semiconductor producers that put money into the U.S. additionally will get favorable tariff therapies, together with exemptions, the division stated.
At some point earlier than the deal was introduced, Beijing, which claims Taiwan to be a part of China, scoffed at it, calling the settlement “an financial plunder” by the U.S. on Taiwan.
The brand of Taiwan Semiconductor Manufacturing Firm (TSMC) is seen at its headquarters in Hsinchu, Nov. 21, 2024. AFP-Yonhap
The deal got here simply when Taiwan-based TSMC, the world’s largest laptop chipmaker, on Thursday introduced plans to extend its capital spending by as a lot as almost 40 p.c this yr after it reported a 35 p.c leap in its web revenue for the most recent quarter due to the increase in synthetic intelligence.
Taiwan Semiconductor Manufacturing Corp., a significant provider to firms together with Nvidia and Apple, reported a web revenue of 506 billion new Taiwan {dollars} ($16 billion) for the October-December quarter, a 35 p.c surge from a yr earlier, higher than analysts’ estimates.
TSMC stated Thursday that its income within the final quarter elevated 21 p.c from a yr earlier to greater than 1.046 trillion new Taiwan {dollars} ($33 billion).
TSMC stated it plans to spice up its capital expenditure finances to $52 billion-$56 billion for 2026, up from about $40 billion final yr.
The corporate’s Taiwan-listed shares have jumped 59 p.c over the previous 12 months, reflecting its sturdy place within the AI-driven market.
Different tech giants together with Microsoft, Meta and Alphabet are spending large on investments in AI infrastructure.
“We anticipate our enterprise to be supported by steady sturdy demand for our forefront course of applied sciences,” Wendell Huang, TSMC’s chief monetary officer, stated in a convention name. He stated spending could be “considerably greater” within the subsequent three years.
Requested about issues over an AI bubble — as critics level to ballooning investments which could not repay — TSMC chairman and CEO C. C. Wei stated he’s assured that the rising demand from clients is actual.
“I am additionally very nervous about it, you guess,” stated Wei. “AI is actual. Not solely actual, it is beginning to develop into our each day life.”
With a market capitalization — complete excellent shares instances share worth — of roughly $1.4 trillion, TSMC is at the moment extra invaluable than Samsung Electronics and Alibaba . It’s Asia’s most precious listed firm.
Alphabet, Google’s guardian, handed the $4 trillion market capitalization mark this month, the fourth Large Tech firm to hit that mark after Nvidia , Apple and Microsoft , though worries about an AI bubble had led to occasional sell-offs.
TSMC has pledged round $165 billion of investments within the U.S. and stated Thursday it’s rushing up development of latest crops in Arizona, seeking to create a fabrication plant cluster and meet sturdy demand from purchasers.
A major beneficiary of AI, given its dominant share in cutting-edge chip manufacturing, TSMC’s outlook stays optimistic, analysts from Morningstar stated in a latest report.
“It (TSMC) is immune from market share shifts as virtually each AI firm depends on TSMC to make chips starting from application-specific built-in circuits to GPUs (graphics processing items),” the Morningstar analysts stated. “This reliance interprets into sturdy pricing energy.”
TSMC additionally has sturdy buffers with a “sturdy backlog from deep-pocketed clients,” they stated, even when there are any short-term drops in demand.
