Taiwan set to avoid 'punishing' 300% tariffs on semiconductor exports, says report — new trade deal could spur $400 billion investment commitment from island nation

Taiwan National Science and Technology Council Minister Wu Cheng-wen said that the U.S. Is not pushing through with its threat of a 300% tariff on chips, at least for those coming from the island. According to the Financial Times, Taiwan is currently finalizing a trade deal with the U.S. While awaiting the results of the U.S. Department of Commerce’s Section 232 investigation. At the moment, U.S. President Donald Trump has applied a 20% tariff on Taiwanese goods, except for semiconductor imports.

“They understand that punishing Taiwan is not in their interests,” Wu told the Financial Times. He also said that the island will help the United States with the development of its semiconductor industry, especially with building science parks. “Of course, there’s the recipes of how to make the chips, but it’s also about the science park management, attracting companies, integrating academic research with industry,” he adds. “No other country has done what we have done.”

Taiwan currently has three science parks and ten technology industrial parks that make it easier for companies to focus on innovation instead of red tape. These parks serve as nodes for the island’s high-tech industries, facilitating collaboration for firms within these zones. Aside from that, they also have a fixed lease rate, so companies do not have to worry about skyrocketing rental prices just to stay inside these zones. This model has enabled Taiwan to produce some of the most advanced tech institutions in the world, with Taiwan Semiconductor Manufacturing Company (TSMC), the crowning jewel of the island’s silicon shield and headquartered in Hsinchu Science Park, being one excellent example.

Aside from helping the U.S. Revive its chipmaking industry, an unnamed U.S. Government official suggested that the new trade agreement would also result in a US$400 billion investment commitment from Taiwan. This will be much easier for the island, as TSMC is already investing $165 billion in Arizona to build new fabs and even an R&D center. Other Taiwanese companies, like GlobalWafers, are also spending billions of dollars to expand their presence within the United States.

This move might seem like an erosion of the island’s leadership in semiconductor manufacturing, but it’s also taking steps to develop a second “silicon shield.” Taiwan has allocated US$3 billion to turn it into an “AI island” while the government is also focusing on building up other industries, like drones, robotics, and medical technology. More importantly, it has restricted the export of TSMC’s most advanced process technologies to help keep it secure — at least in the near future.

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