Despite rising concerns about tariffs, Taiwan’s economy remains on track, the Taiwan Institute of Economic Research (TIER) reported Monday. Although business sentiment dropped across major industries in April, early-year growth and reduced tariff worries may soften the impact. According to TIER, Taiwan’s economy on track despite looming tariffs reflects cautious optimism.
TIER President Chang Chien-yi highlighted that front-loaded orders, triggered by tariff threats, could sustain economic momentum. Additionally, the government’s gradual easing of spending restrictions might boost growth. Chang pointed out that the NT$410 billion (US$13.69 billion) special budget, if approved with bipartisan support, would further support the economy. He expects Taiwan’s GDP growth to reach 3% this year and predicts the final US tariff rate will hover around 15%.
Furthermore, TIER’s April business sentiment index revealed declines across sectors. Manufacturing dropped for the third straight month, while services and construction suffered their fourth consecutive decrease. Despite these drops, Chang emphasized that Taiwan’s economy on track despite looming tariffs shows strong resilience. He explained that strong performance in the first half of the year should carry the economy through the latter half.
Chang also warned about uncertainty caused by shifting US trade policies under President Donald Trump. He cautioned that tariff terms might suddenly change if the US faces increased fiscal pressure. One specific risk involves the US Section 232 investigation into Taiwan’s ICT and semiconductor industries. Although Taiwan’s Cabinet and TSMC have formally responded to the probe, the final decision remains uncertain.
Moreover, Chang discussed the “reservoir effect,” where steep semiconductor tariffs might force TSMC to raise costs for clients. Such cost increases could ripple through the entire downstream supply chain. “No one wants the semiconductor ecosystem to become unstable,” he stated.
Nonetheless, Chang struck an optimistic tone, suggesting that the April declines are “already behind us.” He cited the recent US decision to delay planned EU tariffs from June 1 to July 9 as evidence that earlier panic was premature. In sum, Taiwan’s economy on track despite looming tariffs remains a key message amid global trade tensions.
Overall, TIER’s outlook suggests that while challenges persist, Taiwan’s economy benefits from early-year momentum and easing tariff concerns. This balance may help soften the impact of ongoing trade uncertainties in the months ahead.
