The Information Technology Agreement — Why Most Taiwanese Tech Enters Duty-Free
The WTO Information Technology Agreement (ITA) was signed in 1996 and expanded in 2015 (ITA-II). It committed signatory countries — including the US, Taiwan, the EU, Japan, Korea, and ~80 others — to eliminate tariffs on a defined list of IT products. The list is product-specific: it covers HS codes, not general categories. For Taiwan→US trade, this is the single most important fact: Taiwan doesn't need a bilateral FTA because the ITA does the work an FTA would do, and it's multilateral rather than bilateral.
ITA covers: semiconductors (HS 8541), electronic ICs and microassemblies (HS 8542), printed circuit boards (most of HS 8534), semiconductor manufacturing equipment (specific subheadings in HS 8486), computers and servers (HS 8471), telecommunications equipment (much of HS 8517), and roughly 200 HS subheadings at the 6-digit level. ITA-II (2015) added another 201 products.
ITA does not cover: consumer electronics accessories not on the list, certain electrical connectors, metal/plastic enclosures, packaging materials, chemicals, most non-semiconductor machinery, and steel products. These pay standard US MFN rates — for Taiwan, generally 0–5% and mostly under 3%.
| Product | HS Chapter | US Duty | ITA? |
|---|---|---|---|
| Semiconductor wafers & chips | 8541 | 0% | Yes |
| Integrated circuits (all types) | 8542 | 0% | Yes |
| Printed circuit boards | 8534 | 0% | Most — check 8-digit |
| Computers, servers, storage | 8471 | 0% | Yes |
| Semiconductor mfg equipment | 8486 | 0% | Specific subheadings |
| Network equipment | 8517 | 0% | Most |
| Connectors, sockets, plugs | 8536 | 0–2.5% | Partial |
| Power supplies, adapters | 8504 | 0–3% | Limited |
| Metal/plastic enclosures | Various | 2.5–5% | No |
| LED displays, LCD panels | 8528 / 9013 | 0–5% | Partial |
For comparison: Chinese electronics face the same ITA rates on ITA-covered products — but non-ITA Chinese items face Section 301 surcharges of 7.5–25%. Korean electronics benefit from both ITA and the KORUS FTA. Taiwan sits in the middle: ITA covers the heavy hitters, but no FTA to zero out the non-ITA tail.
TSMC and the Foundry Supply Chain — What Customs Entries Actually Look Like
TSMC fabricates roughly 90% of the world's most advanced logic chips. Almost all of its output is exported — the largest single destination: the United States. A $50 million shipment of 3nm wafers from Hsinchu to an Apple supplier in California pays $0 in US customs duty. The entry is filed electronically; the ITA exemption is claimed by HS code automatically. No origin certificate needed — the ITA sets a bound WTO rate that applies to all WTO members regardless of origin.
The customs complexity in TSMC's supply chain isn't the chips themselves — it's the ancillary items. Test wafers, packaging substrates, specialty chemicals for advanced packaging, lithography masks, fab equipment spare parts. These don't all fall under ITA codes. A silicon wafer carrier (plastic/metal jig) might be Chapter 39 or 73 at 3–5% MFN. Photoresist chemical: Chapter 37 with its own rate. If you're shipping anything in the semiconductor supply chain that isn't the chip itself, check the HS code — the ITA doesn't cover the whole ecosystem.
How US Tariff Policy Affects Taiwan Differently Than China
One of the most common misconceptions is that Taiwan faces the same trade barriers as China. It doesn't. The differences are structural.
Section 301 tariffs apply to China only. A circuit board from Taiwan pays zero (ITA) or base MFN (non-ITA). The same board from China pays zero (ITA) or MFN + 7.5–25% Section 301 (non-ITA). This is the single biggest landed-cost difference and the reason many US importers shifted non-ITA electronics procurement to Taiwan. For the full Section 301 breakdown: Section 301 tariff guide.
No Trump-era tariffs on Taiwan. The 2018–2019 trade actions were China-specific or applied globally to steel/aluminum only (from which Taiwan received country-specific exemptions). Taiwan was never the target of unilateral US tariff increases.
Taiwan is not on any US trade watchlist. No special enforcement measures. Taiwanese goods clear through the same CBP procedures as goods from Japan, Korea, or the EU. The practical result: importing from Taiwan is customs-simple. Duty rates are either zero (ITA) or low single-digit MFN. No layered tariff structure. No exclusion review calendar. No risk of sudden executive orders.
The CHIPS Act and Taiwan's Shifting Export Pattern
The CHIPS Act committed $52 billion to build domestic semiconductor manufacturing. TSMC's Arizona fab — $40 billion for two advanced facilities — began limited 4nm production in 2025; a second fab targets 3nm by 2027. From a customs perspective, the CHIPS Act doesn't change the rates — semiconductors from Taiwan still enter at zero under ITA. What's changing is the volume and composition: as TSMC Arizona ramps up, Taiwan→US trade shifts from finished chips toward intermediate wafers sent for final fabrication. Classification remains the same (HS 8541/8542, ITA-zero). At the same time, Taiwanese equipment and materials suppliers — chemical producers, substrate manufacturers, equipment maintenance firms — are establishing US operations. Their shipments have their own HS codes with their own rates. Key disciplines for new importers: get the HS classification right, check the ITA list, and don't assume everything semiconductor-related is duty-free.
Beyond Chips — Other Taiwan→US Export Categories
| Category | Typical US Duty | Notes |
|---|---|---|
| Bicycles & parts | 0–11% | Complete bikes: 11% MFN. Frames/forks: 3.9%. Parts up to 10%. Taiwan is a major high-end manufacturer (Giant, Merida). No FTA preference. Much better than China-source bikes (MFN + 25% Section 301). |
| Machine tools | 0–4.2% | CNC lathes, machining centers, precision tools. Taiwan is a significant mid-range exporter. Some classifications offer TIB (temporary importation bond) for exhibition/testing. |
| Plastics & products | 0–6.5% | Engineering plastics (polycarbonate, ABS) for electronics often at lower rates than consumer plastic products. |
| Steel products | 0–25% | Riskiest non-electronics category. Section 232 and AD orders may apply. Verify current status for your specific product. |
In every category where Section 301 applies to China, Taiwan has a structural landed-cost advantage. A Taiwanese bicycle: 11% MFN. Chinese bicycle: 11% MFN + 25% Section 301 = 36%. The calculator that compares these costs: landed cost calculator.
Practical Tips for Taiwan→US Importers
- Classify before you ship. For electronics, the difference between ITA-covered (zero) and non-ITA (0–5%) can amount to real money on volume. Get the 8-digit HTS confirmed by your US broker before the PO. Don't rely on the Taiwanese supplier's classification.
- Don't assume ITA extends to accessories. The chip is ITA-zero. The plastic tray, cable harness, power brick, mounting bracket, manual — each has its own HS code. If bundled into a single price, the "goods of a set" rule applies — rate determined by essential character.
- Air freight is standard. Most Taiwan→US electronics move by air. Rates spike during product launch cycles (e.g., Apple's annual iPhone launch pulls massive air capacity). Non-urgent shipments: consolidated ocean from Kaohsiung saves 60–70% vs. air, at the cost of 14–18 days.
- No FTA means simpler paperwork. No origin certificate, no RVC calculation — simpler than USMCA or KORUS entries. The flip: you can't negotiate a lower rate via origin compliance. The rate is the rate.
Related Trade Corridors & Guides
Frequently Asked Questions
Do semiconductors from Taiwan pay US import duty?
No. Semiconductors (HS 8541) and integrated circuits (HS 8542) are covered by the WTO ITA, which commits the US to a bound rate of zero percent. This applies regardless of whether the chips are advanced logic from TSMC, memory chips, analog ICs, or discrete semiconductors. The zero rate is automatic — no origin certificate, no preference claim, no paperwork beyond the standard entry with the correct HS code. Taiwan's entire semiconductor export industry — roughly $50–60 billion annually to the US — clears customs without paying a dollar of duty.
Does Taiwan have a free trade agreement with the US?
No. Taiwan-US trade operates under WTO rules: standard US MFN rates, with zeros for ITA-covered products. The lack of an FTA matters less than it would for other countries because ITA eliminates tariffs on what Taiwan actually exports. Where it's felt: non-ITA electronics, machinery, bicycles, and steel — all pay standard MFN rates an FTA could reduce. Korea, competing in many of the same categories, has the KORUS FTA which zeroes out virtually all electronics — including non-ITA items.
How do Taiwan's duty rates compare to China's for the same products?
For ITA products (chips, ICs, most PCBs, computers): identical — both zero. For non-ITA products: Taiwan pays standard MFN (0–5%). China pays the same MFN plus Section 301 (7.5–25%). A non-ITA electronic component from Taiwan: 2.5%. Same component from China: 2.5% + 25% = 27.5%. The Section 301 differential — not the base MFN — is the primary reason importers shift sourcing to Taiwan.
What Taiwanese products actually pay US customs duty?
The short list: non-ITA electronics accessories (certain connectors, power adapters — typically 2.5%), bicycles (up to 11%), certain steel products (up to 25% if Section 232 or AD), plastic products (0–6.5%), and non-ITA machinery (0–4.2%). For the typical Taiwan→US electronics importer, the most likely duty trigger is power supplies and cable assemblies — frequently non-ITA at ~2.5%. On 10,000 units of a $100 power supply, that's $25,000 in duty. Get the classification right.