TRUMP’S TARIFF WAR BROUGHT SIGNIFICANT UNCERTAINTY TO TAIWAN’S ECONOMY

Taiwan’s economic growth rate reached 4.84% in 2024, primarily supported by a recovery in the semiconductor sector. Major Taiwanese and US tech companies demonstrated strong momentum in capacity expansion. Entering 2025, geopolitical risk affected investor confidence as the 2025 GDP growth forecast was revised several times by the Directorate-General of Budget, Accounting, and Statistics (DGBAS) from 3.29% at the end of last year to 3.1% this May. On April 1st, President Donald Trump announced a reciprocal tariff policy and although the implementation has been temporarily suspended for 90 days, this new round of trade tensions is broader in scope and carries greater uncertainty than the US-China trade war of 2018.

Taiwan’s export performance remained strong in the first four months of 2025, up 20.6% YoY. Among the two largest export destinations, exports to the US and China posted a robust 32.6% and 11.6% increase respectively. Since the US and China trade war in 2018, there has been a notable shift in Taiwan’s export destinations as the share of exports to China declined from 42.3% in 2021 to 28.4% in 2025, while the share to the US rose from 14.7% to 25.9%.