US and Taiwan agree on significant tariff reduction pact

US and Taiwan Reach Trade Deal

The United States and Taiwan have finalized a trade agreement that will reduce tariffs on Taiwanese goods and facilitate billions of dollars in spending on US products. The deal, announced on Thursday, lowers the general tariff on Taiwanese goods from 20 percent to 15 percent, equivalent to the rates applied to trade partners South Korea and Japan.

In exchange for this reduction, Taiwan has agreed to purchase approximately $85 billion worth of US energy, aircraft, and equipment. Under the agreement, Taiwan will eliminate or reduce 99 percent of its tariff barriers, providing preferential market access to numerous US goods, including auto parts, chemicals, machinery, health products, dairy products, and pork.

The US will also exempt a range of Taiwanese goods from tariffs, including chalk, castor oil, pineapples, and ginseng. Taiwanese President William Lai Ching-te stated that the agreement would take the average tariff rate on Taiwanese goods to 12.3 percent, making it more competitive in the US market.

The deal includes provisions for Taiwanese brands to enter international markets, with Lai highlighting the potential for products such as Phalaenopsis orchids, tea, and bubble tea ingredients to become more price-competitive. The agreement builds on longstanding trade relations between Taiwan and the US, with US Trade Representative Jamieson Greer noting its significance in enhancing supply chain resilience, particularly in high-technology sectors.

The deal marks a significant development for Taiwan’s economy, with exports rising by 35 percent in 2025 driven by demand for AI chips. The agreement does not include specific commitments from Taiwan to invest in the US chip industry, despite previous announcements.

Source: Al Jazeera