Source: [https://www.msn.com/en-us/money/markets/taiwan-pledges-250-billion-in-us-spending-in-exchange-for-lower-tariffs/ar-AA1UiQXJ](https://www.msn.com/en-us/money/markets/taiwan-pledges-250-billion-in-us-spending-in-exchange-for-lower-tariffs/ar-AA1UiQXJ)
>The U.S. and Taiwan signed a trade deal Thursday aimed at boosting American production of semiconductors in exchange for lower tariffs, adding to the Trump administration’s efforts to bring critical industries to the U.S.
>Under the agreement, Taiwan Semiconductor Manufacturing will add several new factories to its cluster in Arizona as part of a $250 billion investment in the U.S., the Commerce Department said. In exchange, the U.S. is cutting tariffs on Taiwanese goods to 15%, from 20%, and exempting Taiwanese chip companies like TSMC that are investing more in America. The contours of the deal were reported earlier in the week.
>The agreement adds to deals with trading partners including the European Union and Japan and a truce with China. The Trump administration is attempting to de-escalate tensions over tariffs to avoid denting the economy while securing added investment in the U.S.
>The Taiwan deal focuses on semiconductors because of the dominance of TSMC, which essentially has a monopoly on making the advanced chips that power the modern economy. They are critical for customers from Nvidia to Apple that want to build data centers for training AI models or sell consumer products.
>TSMC has received several billion dollars in subsidies through the 2022 Chips and Science Act and will have roughly a dozen plants in Arizona after its latest expansion, including some advanced manufacturing capabilities that give it a sizable footprint outside Taiwan.
>“We’re going to bring it all over so we become self-sufficient in the capacity of building semiconductors,” Commerce Secretary Howard Lutnick told CNBC.
>Skeptics say TSMC still has most of its footprint in Taiwan and that the U.S. plants represent a long-planned move to reduce risk by building outside the island nation. Creating a meaningful chunk of the global semiconductor supply chain in the U.S. would take decades and be costly, they say.
>TSMC’s moves are in focus because the company is a big driver of Taiwan’s economy and seen by some observers as a deterrent for a Chinese invasion. China claims the self-ruled island as its own territory, to be seized by force if necessary.
>China has taken a more aggressive stance toward Taiwan recently, but some analysts say it wouldn’t want to tank the global economy by attacking Taiwan and potentially disrupting TSMC’s production of chips. That supply also gives the U.S. incentive to protect Taiwan, they say.
>Under the trade agreement, Taiwan has committed to help building domestic industrial parks like those TSMC has in Arizona. The company recently bought 900 acres of land to expand its presence there.
>TSMC said Thursday it plans to spend up to $56 billion on capital expenditures this year, highlighting unrelenting demand for its chips.