Shift from Subsidies to Tariffs and Investment
With the United States and Taiwan announcing a trade and investment linkage agreement bundling semiconductor, AI, and energy cooperation, the method of global semiconductor supply chain restructuring has evolved yet another step. The essence of this agreement lies not in the investment scale itself but in the fact that tariffs and market access rules were designed based on whether factories are built in the United States. To understand this, it is first necessary to examine what policy the CHIPS Act was.
The CHIPS Act is a semiconductor industry promotion law enacted by the United States in 2022, created to respond to the long-term collapse of U.S. semiconductor manufacturing capabilities. The United States accounted for more than 30% of global semiconductor production in the 1990s, but that share has recently dropped sharply to below 10%. Accordingly, the U.S. government has been inducing global semiconductor companies to build factories in the United States through large-scale subsidies, tax credits, and research and development support. The core of the CHIPS Act was 'reshoring through financial support.'
However, as the CHIPS Act began to be fully implemented, limitations also became clear. Subsidies carry a large fiscal burden, and after payment it is difficult to completely control a company's long-term location strategy. Above all, as the U.S. perspective of recognizing semiconductors as national security assets strengthened, more structural and continuous control means became necessary. At this point, the United States began going one step further from subsidy-centered policy to use trade rules themselves as industrial policy tools.
This U.S.-Taiwan agreement symbolizes that transition. The structure reported to be included involves setting the mutual tariff ceiling on Taiwan products at 15% premised on minimum $250 billion of direct investment in the U.S. by Taiwan companies, and granting zero-tariff import benefits linked to production capacity for companies constructing new factories in the United States in the semiconductor sector. Given the design allowing up to 2.5 times the planned production capacity to be imported without tariffs during the factory construction period and up to 1.5 times after operation begins, investment and tariffs are combined into a single rule.
This is the decisive difference from the CHIPS Act. While the CHIPS Act was an incentive of 'build a factory and we'll give you money,' this agreement is closer to a signal that 'build a factory and we'll open market access, don't build and you may face disadvantages.' Since tariffs and market access directly affect corporate profit structures, this becomes a much stronger pressure than short-term subsidies.
From an industrial and geopolitical perspective, this agreement demonstrates that the United States has reclassified semiconductors not as simple manufacturing industry but as core national security infrastructure. It is interpreted as an attempt to structurally draw Taiwan's cutting-edge foundry capabilities into the U.S. industrial ecosystem and fix allied supply chains through rules. This is a different logic from the existing global division of labor centered on efficiency and cost.
The message this agreement sends to global semiconductor companies and policy authorities including Korea is also clear. Semiconductor competitiveness no longer lies only in technological capability or process fineness. Geoeconomic design ability encompassing investment location, corporate structure, tariff application, and trade rules has become part of export competitiveness. If the CHIPS Act was the starting point of subsidy competition, the U.S.-Taiwan agreement demonstrates the next stage — that the weapon for supply chain restructuring has moved from 'money' to 'rules.'
Ultimately, this U.S.-Taiwan semiconductor agreement is close to a declaration. The semiconductor hegemony competition is now moving from the question of who leads in processes to the question of who designs the rules of market access. The era of subsidies is passing, and the era of trade rules is fully opening.
