Various reports say the US and Taiwan have clinched a trade pact to cut tariffs to 15% in exchange for a $500 billion Taiwanese commitment. For the money, half of it will be direct investment in US manufacturing and half of it credit guarantees for other investments in the US.
The deal is poised to be signed today and would cut tariffs from 20%.
A report says that TSMC and other chipmakers have committed to $250 billion in chip investments and credit guarantees, so the bulk of this is investments in FABs in Arizona. As for chip exports, some kind of quota system has been established, bringing tariffs down.
As part of the deal, the US will apply a zero percent reciprocal tariff for generic pharmaceuticals, their ingredients, aircraft components and other unavailable natural resources.
Commerce Secretary Howard Lutnick outlined that the US wants to be self-sufficient in semi-conductor manufacturing and that this will be a big step towards it, not just with the chips but with the associated components. He said the objective is to bring 40% of Taiwan's semiconductor manufacturing capacity during Trump's term.
