U.S. and Taiwan Sign Historic Semiconductor Deal Amid China's Opposition
In a landmark deal, the United States and Taiwan have signed a commercial agreement that would significantly lower tariffs on various exports from Taiwan, including semiconductors. The deal, announced on Thursday (15), includes investments of at least $250 billion by Taiwan in the U.S. technology industry, inciting a potential backlash from China.
Background
The agreement paves the way for Taiwan, a global powerhouse in semiconductors, to bolster the American technology industry. It proposes a reduction of tariffs from 20% to 15%, in exchange for a commitment from Taiwanese semiconductor companies to invest and develop production in the United States12.
Key Developments
As part of the initiative, Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, confirmed it had bought a second tract of land in Arizona3. The reshoring initiative has been framed by U.S. Commerce Secretary Howard Lutnick as a strategic imperative for Taiwan4.
While Taiwan has celebrated the deal as a home run,
it has also raised concerns about the potential impact on Taiwan's industrial base, particularly its semiconductor industry5.
Reactions and Implications
The agreement has drawn sharp criticism from China, which views Taiwan as part of its territory. China's Ministry spokesman Guo Jiakun stated that China consistently and resolutely opposes any agreement... signed between countries with which it has diplomatic relations and the Taiwan region of China
6.
The Chinese embassy also accused Washington of violating its commitment to maintain only unofficial ties with Taiwan7. Beijing perceives the island as a rebellious province over which it claims sovereignty8.
Meanwhile, the Supreme Court is set to rule on President Donald Trump’s use of an emergency wartime law to unilaterally impose sweeping tariffs9. In Europe, leaders like French President Emmanuel Macron and U.K. Prime Minister Keir Starmer have also voiced their opposition to Trump's tariffs10.
Conclusion
In spite of China's opposition and potential implications, this deal marks a significant milestone in U.S.-Taiwan relations and the global semiconductor industry. However, the consequences of this agreement on international relations and the global technology industry remain to be seen.