The deal comes ahead of President Donald Trump’s planned visit to China and suggests a deepening economic relationship between the U.S. and the Beijing-claimed island.

A Taiwan Semiconductor Manufacturing Co. (TSMC) facility in Nanjing, China, on Jan. 9.Bloomberg via Getty Images

The Trump administration reached a trade deal with Taiwan on Thursday, with Taiwan agreeing to remove or reduce 99% of its tariff barriers, the office of the U.S. Trade Representative said.

The agreement comes as the U.S. remains reliant on Taiwan for its production of computer chips, the exporting of which contributed to a trade imbalance of nearly $127 billion during the first 11 months of 2025, according to the Census Bureau.

Most of Taiwan`s exports to the U.S. will be taxed at a 15% rate, the USTR`s office said. The 15% rate is the same as that levied on other U.S. trading partners in the Asia-Pacific region, such as Japan and South Korea.

Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick attended the signing of the reciprocal agreement, which occurred under the auspices of the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States. Taiwan`s Vice Premier Li-chiun Cheng and its government minister Jen-ni Yang also attended the signing.

"President Trump`s leadership in the Asia-Pacific region continues to generate prosperous trade ties for the United States with important partners across Asia, while further advancing the economic and national security interests of the American people," Greer said in a statement.

The Taiwanese government said in a statement that the tariff rate set in the agreement allows its companies to compete on a level field with Japan, South Korea and the European Union. It also said the agreement "eliminated" the disadvantage from a lack of a free trade agreement between Taiwan and the U.S.

The deal comes ahead of President Donald Trump`s planned visit to China in April and suggests a deepening economic relationship between the U.S. and Taiwan.

Taiwan is a self-ruled democracy that China claims as its own territory, to be annexed by force if necessary. Beijing prohibits all countries it has diplomatic relations with - including the U.S. - from having formal ties with Taipei.

Cheng said Taiwan hopes the agreement will make it a strategic partner with the U.S. "so as to jointly consolidate the democratic camp`s leading position in high technology."

The agreement would make it easier for the U.S. to sell autos, pharmaceutical drugs and food products in Taiwan. But the critical component might be that Taiwanese companies would invest in the production of computer chips in the U.S., possibly helping to ease the trade imbalance.

In a separate but related deal, Taiwan will make investments of $250 billion in U.S. industries, such as computer chips, artificial intelligence applications and energy. The Taiwanese government says it will provide up to an additional $250 billion in credit guarantees to help smaller businesses invest in the U.S.

The investments helped enable the U.S. to reduce its planned tariffs from as much as 32% initially to 15%.

Taiwan`s government said it will submit the reciprocal trade deal and investment plans to its legislature for approval.

In Taipei, President Lai Ching-te told reporters that Taiwan had agreed to reduce tariffs on imports from the U.S. but stressed that the rate on 93 items would remain unchanged to protect important agriculture and industrial sectors such as rice farming.

The U.S. side said the deal with Taiwan would help create several "world-class" industrial parks in America in order to help build up domestic manufacturing of advanced technologies such as chips. The Commerce Department in January described it as "a historic trade deal that will drive a massive reshoring of America`s semiconductor sector."

In return, the U.S. would give preferential treatment to Taiwan regarding the possible tariffs stemming from a Section 232 investigation of the importing of computer chips and semiconductor manufacturing equipment.

TSMC, the chip-making giant, is expected to be the key investor. It has committed to $165 billion in investments in the U.S., including not only fabrication plants but also a major research and development center that would help build a supply chain to power U.S. artificial intelligence ambitions. Major U.S. tech companies such as Nvidia and AMD rely on TSMC for manufacturing highly advanced chips.

When asked whether investing in the U.S. would endanger Taiwan`s most advanced industries, Lai said: "Whether it`s TSMC or other industries, as long as their R&D centers are in Taiwan, their advanced manufacturing processes are in Taiwan and their largest production volume is in Taiwan, Taiwan can continue to develop steadily."

Taiwan said the investments will be two-way, with U.S. companies also investing in key Taiwanese industries. Nvidia this week signed a land deal in Taipei to build a headquarters office there.