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Taiwan and U.S. Reach Trade Agreement Covering Aircraft and Engines

Taiwan and U.S. Reach Trade Agreement Covering Aircraft and Engines
The United States and Taiwan have formalized a landmark bilateral trade framework known as the “U.S.–Taiwan Agreement on Reciprocal Trade,” representing a significant advancement in their economic and strategic relationship. The agreement was finalized under the oversight of U.S. Trade Representative Jamieson Greer, as announced by the Office of the United States Trade Representative (USTR) on February 12, 2026.
Provisions and Strategic Emphasis
The agreement aims to reduce and eliminate both tariff and non-tariff barriers that have historically impeded bilateral trade. It seeks to enhance market access for U.S. goods and services within Taiwan, while fostering regulatory cooperation and strengthening supply-chain resilience. Central to the framework is a focus on commercial aircraft, aircraft engines, and related aerospace equipment. Although the USTR has not released a detailed sector-by-sector financial breakdown, official briefings indicate Taiwan’s commitment to purchasing substantial volumes of U.S. commercial aviation products, potentially amounting to approximately $15.2 billion as part of a broader trade package.
Beyond aerospace, Taiwan has pledged to remove or reduce tariffs on 99% of U.S. goods. In exchange, the United States will lower tariffs on Taiwanese exports to 15%, aligning these rates with those extended to other key Asian partners such as Japan and South Korea. The overall agreement is projected to increase American exports—including energy, aviation, and agricultural products—by more than $84 billion.
Economic Impact and Market Response
The trade deal has been met with largely positive reactions from various sectors. U.S. agricultural groups and cattle producers have welcomed the duty-free access for beef and dairy products, anticipating expanded opportunities in the Taiwanese market. Additionally, the agreement includes significant Taiwanese investments in U.S. industries such as semiconductor manufacturing and artificial intelligence, which could have far-reaching implications for the global technology landscape.
This framework arrives as Taiwan seeks to diversify and secure its supply chains, particularly in high-technology and transportation sectors. Concurrently, the United States aims to bolster exports in strategic industries including aerospace, energy, and advanced manufacturing. The commitments related to commercial aviation align with Taiwan’s long-term objectives for fleet renewal and expanded air-transport capacity, while simultaneously supporting U.S. manufacturers and suppliers.
Despite these advances, challenges remain. Taiwan has resisted U.S. proposals to relocate 40% of its semiconductor supply chain to American soil, describing such demands as “impossible.” Nevertheless, the agreement’s provisions on investment and cooperation in advanced technologies signal a notable shift in the competitive dynamics of the sector, potentially increasing pressure on global rivals to adapt.
Nature and Scope of the Agreement
The U.S.–Taiwan Agreement on Reciprocal Trade constitutes an officially signed, government-to-government framework designed to facilitate large-scale commercial transactions, particularly within the aerospace sector. It does not represent a single procurement contract or detailed purchase order from manufacturers, and specific information regarding companies, aircraft types, or engine models has not been disclosed.
As implementation proceeds, the agreement is poised to reshape trade relations across multiple industries, reinforcing the strategic partnership between the United States and Taiwan.

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