Amid rising tensions with Iran in the Middle East, the United States has taken a move likely to anger China. On Thursday, Washington approved a major trade agreement with Taiwan, aimed at directly challenging China’s dominance in the semiconductor sector. Under the deal, the US will reduce tariffs on Taiwanese goods, while Taiwan has pledged USD 250 billion in new investment in the United States over the coming years.
The US has called the agreement historic, stating it will provide a significant boost to America’s semiconductor industry. Previously, former President Donald Trump had imposed a 32% tariff on goods from Taiwan, later reduced to 20%. Under the new agreement, tariffs will fall further to 15%, putting them on par with the rates applied to Japan and South Korea. The deal is expected to strengthen US supply chains and promote domestic production of critical components.
Boosting economic and industrial ties
The US Commerce Department said the agreement will create a long-term economic partnership, including the establishment of world-class industrial parks in the United States to encourage local manufacturing. Taiwan’s government confirmed the agreement, emphasising that it will deepen strategic cooperation between the two nations and enhance economic ties.
Military sales and rising tensions
This announcement comes after the US last month approved USD 11 billion in weapons, equipment and military services for Taiwan. The shipment includes Javelin systems, Altius-700M and Altius-600 unmanned aerial vehicles, spare parts for AH-1W SuperCobra helicopters, HIMARS multiple-launch rocket systems, M107A7 self-propelled artillery units and TOW anti-tank missile systems. China reacted strongly to the military sales, imposing sanctions on several American companies and condemning the actions as violations of its sovereignty. Analysts say the new trade agreement could further escalate tensions between Beijing and Washington, as both nations compete for strategic and economic influence in the Indo-Pacific region.
