Trump Admin And Taiwan Close To Finalizing Trade Pact; $100B In TSMC Plants Slated For Arizona
The Trump administration and Taiwan are in the 'final stages' of negotiations on a tariff agreement which would see the United States lower tariffs on the self-governing island's exports to 15% from 20%.
In exchange, Taiwan Semiconductor Manufacturing Co (TSMC) would commit to build five new chip plants in Arizona - roughly doubling its manufacturing presence in the state, along with building two advanced packaging facilities, Bloomberg reports.
The commitments are on top of existing plans for up to $165 billion in US investment by TSMC - a company which has come into recent focus as the world eyes China's next move in light of the Trump administration snatching Maduro (and effectively Venezuela) over drugs and oil.
Given that a single fab costs roughly $20 billion to build in the US, TSMC's additional investment would likely top $100 billion - with completion dates for the four extra fabs occurring sometime in the 2030s, the report continues.
In a Tuesday statement, the Office of Trade Negotiations in Taipei said that the two sides had arrived at a "broad consensus" on a trade, and are now in discussions to hold a concluding meeting, which would be sent to the legislature for review.
Assuming a pact is signed, it would mark another trade win for Trump, while bringing Taiwan's levies from the US to the same level as neighboring Japan and South Korea.
Trump administration officials including Commerce Secretary Howard Lutnick had laid out their expectations for Taiwan to promise significant additional investments by TSMC in chip production on US soil. Any agreement with Taipei risks provoking China, which claims the island as part of its territory — a view Taiwan rejects.
Taiwan has been trying to conclude a deal with the US before Trump meets Chinese leader Xi Jinping in China, according to a senior official in Taipei who declined to be identified discussing the sensitive issue. The US leader is expected to visit China in April. -Bloomberg
That said, the US Supreme Court could quickly make this exercise moot - or at least delay it, with a ruling set for as soon as Wednesday on the legality of Trump's tariffs (which, as we noted earlier, has workarounds).