The Donald Trump administration is close to finalizing a trade agreement with Taiwan that would reduce tariffs on Taiwanese exports from 20% to 15%. In exchange, TSMC, the world’s largest chip manufacturer, would build at least five additional semiconductor plants in Arizona. The agreement, reported by the New York Times, would bring Taiwan’s tariff rate in line with those of Japan and South Korea. Negotiations are in their final stages, with a possible announcement as early as this month, although some details remain unresolved.
What exactly does the agreement include?
According to reports, the tariff on Taiwanese goods would fall to 15%, with the exception of semiconductors, which could be exempted based on a Section 232 review under the U.S. national security law. Countries that invest in U.S. factories would thus avoid tariffs linked to national security. TSMC would commit to building five new plants in Arizona, adding to its existing plans. Those plans already include three plants operating or under construction: the first began mass production in the fourth quarter of 2024, the second is due by 2028, and the third by 2030. In addition, in March 2025, TSMC pledged to build another three plants, two chip assembly facilities, and a research and development center.
How much money will TSMC invest?
TSMC has already announced investments worth $65 billion (approximately CZK 1.5 trillion) in three advanced wafer fabrication plants in Arizona. In March 2025, it added another $100 billion (about CZK 2.3 trillion) for three additional plants, two assembly lines, and a research center, bringing the total to around $165 billion (approximately CZK 3.8 trillion). The new plan linked to the tariff agreement could increase spending in Arizona to as much as $465 billion (roughly CZK 10.7 trillion). Economist Liu Pei-chen of the Taiwan Institute of Economic Research estimates that TSMC could build 6 to 8 plants in Arizona, with a monthly capacity of at least 150,000 wafers—enough to meet U.S. demand for high-performance artificial intelligence chips.
Impact on chip production
This expansion would create two production hubs—one in Taiwan and the other in the U.S.—instead of the current model with a single hub in Taiwan. A complete semiconductor hub would be established in the U.S., including advanced chip packaging such as 3D CoWoS and SOIC for customers such as Nvidia and AMD. TSMC recently purchased 900 acres (approximately 364 hectares) in Phoenix to support this massive expansion.
TSMC faces challenges such as the high depreciation costs of construction in the U.S., which could affect factory utilization in Taiwan and profitability. Geopolitical risks include weakening Taiwan’s "silicon shield" against China if the U.S. achieves greater self-sufficiency. The Taiwanese government confirmed broad agreement on tariff reductions without cumulative duties and preferential treatment under Section 232, but declined to comment on details ahead of the final meeting. TSMC has remained silent due to the quiet period before its investor conference on January 15. The Supreme Court’s decision on the legality of Trump’s global tariffs, expected on January 14, 2026, could affect the negotiations if it strikes down the tariffs.
Other similar agreements
This agreement follows Trump’s April 2025 tariffs on dozens of trading partners. Similar agreements have already secured investments from Japan, South Korea, and the European Union in electronics and other industries. For Taiwan, this would bring economic benefits such as better access to the U.S. market, while the U.S. would strengthen its chip manufacturing. Challenges for TSMC in Arizona include permits, labor, energy and water supplies, and supply chains, with no clear construction timeline or incentives.
Additional source: theinformation.com
