Latest US-Taiwan Tariff Negotiations: Rate Cut to 15% in Exchange for TSMC US Factory Expansion

By ariachiang

2026-01-13

Taiwan and the United States have achieved a major breakthrough in tariff negotiations. The U.S. will lower tariffs on Taiwanese exports from the original 20% to 15%, as of the latest update on January 13, 2026. This move grants Taiwan the same import treatment as Japan and South Korea, helping to reduce the cost of exports to the U.S., particularly benefiting the semiconductor and ICT sectors, which together account for nearly 90% of Taiwan’s trade surplus with the U.S. Following the announcement, the Taiwan stock market opened sharply higher on January 13, reaching an intraday high of 30,973 points, while TSMC’s stock surged to a record NT$1,720, with trading volume accounting for nearly 30% of the total market.

The progress in negotiations is mainly driven by the U.S.’s trade reshaping strategy, using tariffs as leverage to secure increased investment from allies, thereby strengthening national security and supply chain resilience. The U.S. places high importance on advanced chip supply. Amid rising geopolitical risks, it has requested TSMC to expand capacity in Arizona, planning at least five new fabs with a total investment potentially exceeding US$165 billion. Taiwan, meanwhile, went through multiple rounds of talks, including the first phase from April to July 2025. The Executive Yuan’s Office for Trade Negotiations noted that both sides have reached consensus on tariff reductions and principles for supply chain cooperation, while also striving to avoid overlapping tariffs and ensuring benefits related to Section 232.

In the short term, the agreement is expected to complete legal review and be officially announced by the end of January 2026, further boosting the Taiwan stock market and export confidence. In the medium term, it will help Taiwan’s semiconductor industry deepen cooperation with the U.S., though attention must be paid to rising investment costs for new fabs and potential production delays extending into the 2030s. For the U.S., the agreement is expected to drive substantial expansion of advanced semiconductor capacity, accelerate domestic chip manufacturing, strengthen supply chain security, and meet AI demand, creating tens of thousands of jobs and reducing reliance on overseas suppliers.

Overall, the market outlook remains positive. Supported by continued AI demand, Taiwan’s economic growth could exceed the previously forecast 3.54%, although traditional industries still face low-cost competition from China, requiring the government to strengthen differentiated strategies. For the U.S., this can also serve as a showcase of trade policy achievements, reinforcing the Trump administration’s policy successes.

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