US and Taiwan agree on tariff reduction pact

US and Taiwan Reach Trade Deal

The United States and Taiwan have finalized a trade agreement that reduces tariffs on Taiwanese goods and facilitates 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 imports from 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 on US goods, including auto parts, chemicals, machinery, health products, dairy products, and pork.

The US, in turn, will 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 result in an average tariff rate on Taiwanese goods of 12.3 percent, after accounting for various carve-outs.

Lai emphasized that the deal would enable Taiwanese products, such as Phalaenopsis orchids, tea, bubble tea ingredients, and coffee, to become more competitive in the US market. He also highlighted the importance of ensuring Taiwanese brands enter international markets.

The agreement does not include specific commitments from Taiwan regarding investments in the US chip industry, despite previous announcements by the Trump administration. The Office of the US Trade Representative noted that the two sides “take note” of a prior commitment made by Taiwan Semiconductor Manufacturing to invest $100 billion in the US.

US Trade Representative Jamieson Greer stated that the agreement would enhance the resilience of supply chains, particularly in high-technology sectors. He also praised President Trump’s leadership in promoting trade ties between the US and Asia.

Source: Al Jazeera