Taiwan has reached a new trade agreement with the United States that lowers tariffs on its exports, a deal welcomed in Taipei and criticised by Beijing.
It’s premier hailed the deal signed on Friday as the “best tariff deal” enjoyed by countries with trade surpluses with Washington.
The agreement cuts US tariffs on Taiwanese goods to 15 per cent in exchange for $250bn in new investments in the US tech industry.
It is comparable to deals with the European Union and Japan worked out after president Donald Trump proposed sweeping tariffs for many US trading partners.
“For the time being, we obtained the best tariff deal enjoyed by the countries with trade surplus with the US," said Taiwan premier Cho Jung-tai.
"This also shows that the US sees Taiwan as an important strategic partner.”
“Our goal is to lower mutual tariffs” Mr Cho said.
“Therefore, according to the results of the negotiations, Taiwan has successfully obtained 15 per cent in tariffs with no added fees. This is the same tariff imposed on Japan, Korea and the European Union.”
Mr Trump initially set the tariff at 32 per cent on Taiwanese goods but later changed it to 20 per cent.
China claims independently governed Taiwan as its territory, and in Beijing, a foreign ministry spokesperson slammed the agreement when asked at a routine news briefing.
“China always firmly opposes countries having diplomatic relations with China and China’s Taiwan region signing any agreement that carries sovereign connotations and an official nature with China’s Taiwan region,” said Guo Jiakun.
The US Department of Commerce said the deal with Taiwan would establish an economic partnership to create several world-class US-based industrial parks to help increase domestic manufacturing.
It's “a historic trade deal that will drive a massive reshoring of America’s semiconductor sector,” the department said in a statement.
Mr Cho said Taiwan had secured 15 per cent tariffs with no additional fees for the automotive and wood furniture industries, and no tariffs for some components used in the aerospace industry.
The agreement must be ratified by Taiwan’s parliament, where opposition lawmakers have expressed concern about the potential impact on the island's domestic semiconductor industry.
It coincided with an announcement by Taiwan-based TSMC, the world’s largest computer chip maker, that it plans to increase its capital spending by as much as nearly 40 per cent this year. It reported a 35 per cent jump in its net profit for the latest quarter thanks to the boom in artificial intelligence.
TSMC has pledged around $165bn of investments in the US and said it’s speeding up construction of new plants in Arizona, looking to create a fabrication plant cluster and meet strong demand from clients.
The Commerce Department said that Taiwanese semiconductor producers that invest in the US will get favourable tariff treatment, including exemptions.
Ryan Majerus, a trade official in Mr Trump’s first administration and in former president Joe Biden’s, said the agreement’s “timing is interesting.’’
The Supreme Court has yet to rule on the legality of Mr Trump’s most sweeping tariffs, which he has used to strong-arm concessions out of other US trading partners. The justices could strike down the tariffs as early as this month.
But Taiwan, facing ongoing threats from China, was eager to reach a deal and strengthen relations with the United States anyway.
“Wanting to solidify things with the US probably played a big role here,’’ said Mr Majerus.
Chaos for commuters on Tokyo metro as rare power outage halts services
Thailand suffers another construction accident day after rail tragedy that killed 32
Thailand prime minister demands accountability after crane disaster that killed 32
Former South Korean president Yoon sentenced to prison in first martial law trial
Hundreds evacuated after fire tears through shanty town in South Korea’s Gangnam
Kim Jong Un’s sister says South’s hopes for better relations are an ‘illusion’
