https://crsreports.congress.gov
Updated August 18, 2025
U.S.-Taiwan Trade and Economic Relations
Taiwan is a top U.S. trade partner and a key link in global
technology and manufacturing supply chains. Taiwan’s
economy is highly dependent on global trade; exports
account for about 70% of its gross domestic product (GDP).
Taiwan’s policies are seeking to generate growth in
emerging technologies and reduce its dependence on the
People’s Republic of China (PRC or China) by diversifying
trade and investment and onshoring production. Central to
these efforts are U.S. and Taiwan government actions to
deepen commercial ties. Issues facing Congress include the
Trump Administration’s announcement of a 32% tariff on
Taiwan goods and legislation aimed at preventing double
taxation and boosting two-way investment. Also see CRS
In Focus IF10275, Taiwan: Background and U.S. Relations;
CRS In Focus IF12481, Taiwan: Defense and Military
Issues; and CRS Infographic IG10073, Taiwan’s Role in
Global Semiconductor Supply Chains.
U.S.-Taiwan Commercial Ties
Taiwan is the United States’ 7
th
-largest merchandise trading
partner ($158.6 billion in total goods trade), 10
th
-largest
export market ($42.3 billion), and 8
th
-largest source of
imports ($116.3 billion), according to 2024 U.S. data (and
when the European Union is considered as one trading
partner). U.S. agricultural exports to Taiwan in 2024 were
$3.8 billion. In 2024, U.S. service exports to Taiwan were
$13.7 billion, and Taiwan’s services exports to the United
States were $13.2 billion. Since 2018, Taiwan’s goods
exports to the United States and trade deficit with the
United States ($74 billion in 2024) have increased in part
due to U.S. tariffs on the PRC and efforts to shift some
production from the PRC to Taiwan. Taiwan’s exports to
the United States grew by 100% between 2018 and 2022,
fell by 4.5% in 2023 over 2022, and rose by 32.5% in 2024
over 2023. (Figure 1.)
Figure 1. U.S.–Taiwan Goods Trade 2001-2024
Source: CRS, with data from the U.S. Bureau of Economic Analysis
(BEA) and Taiwan’s Ministry of Economic Affairs.
Notes: In 2024, Taiwan firms received $200.1 billion in U.S. export
orders, which included Taiwan firms’ PRC-based production.
In 2024, U.S. direct investment stock in Taiwan was $20.1
billion, and Taiwan’s direct investment stock in the United
States was $14.8 billion, according to BEA. (Data do not
include investments made through Hong Kong and offshore
tax havens.) Taiwan is a top holder of foreign exchange
reserves, with $598.4 billion in reserves as of June 2025.
Taiwan is the 11
th
-largest foreign holder of U.S. Treasuries
with $292.9 billion in holdings as of May 2025.
Taiwan’s Economy
Population: 23.4 million people.
2023 nominal GDP: $753.6 billion (1.4% agriculture, 37.6%
industry, 61% services); 22
nd
largest global economy.
Unemployment Rate: 3.4% (12.4% ages 20-24; 6.1% ages
25-29).
Main industries: Electronics, semiconductors, information
technology, petrochemicals, textiles, steel, machinery, cement,
food, autos, and pharmaceuticals.
Semiconductors: About 90% of global advanced chip
production is based in Taiwan. Taiwan firms are also active in
chip R&D; materials (e.g., silicon wafers); design; and assembly,
packaging, and testing. Policy debates in Taiwan include to
what extent firms should build capacity in Taiwan, the PRC,
the United States, and other markets.
Competitiveness: Switzerland’s International Institute for
Management Development Business School ranks Taiwan as
the world’s sixth most competitive economy. Taiwan is coping
with stagnant wages; technical talent gaps; an aging population;
and land, power, and water shortages. The government has
taken some steps to phase out nuclear power, but alternatives
at this time are limited. The Taiwan government’s “5+2” plan
is boosting targeted industries—advanced manufacturing,
biotechnology, renewable energy, recycling, and defense.
Efforts to Strengthen Economic Ties
The United States and Taiwan have undertaken several
efforts to address market barriers and bolster economic ties:
In 2022, the United States and Taiwan launched a “U.S.-
Taiwan Initiative on 21
st
Century Trade,” in parallel to
the U.S.-led Indo-Pacific Economic Framework for
Prosperity, which does not include Taiwan. The initiative
covers trade facilitation, regulatory practices, digital trade,
anti-corruption, technical standards, labor and environment,
agriculture, state-owned enterprises, and nonmarket prac-
tices. The two sides reached their first agreement in 2023.
In 2021, the United States and Taiwan resumed talks, last
held in 2016, under a 1994 Trade and Investment
Framework Agreement (TIFA). Taiwan’s agricultural
barriers (e.g., regulations banning imports of U.S. pork and
beef that contain a leanness-enhancing additive) led the
U.S. government to suspend TIFA talks between 2007 and
2013. U.S. concerns about market barriers include those in
digital services, biotech, medical devices, and energy.
In 2020, the two sides launched a U.S.-Taiwan Economic
Prosperity Partnership Dialogue. Annual meetings have
discussed supply chain security; PRC economic coercion;
digital trade; 5G networks; research; energy; and tax issues.
In 2024, the U.S. International Development Finance
