Editorial forewarning: Expect more turmoil in Trump's trade dealings
Taiwan's economy grew by an impressive 7.96% year-on-year in the second quarter, marking the best quarterly performance in four years. However, this growth may be short-lived as the ongoing trade tensions with the United States pose a significant threat.
The growth in the first half was largely due to global customers placing orders amid uncertainty about US President Donald Trump's tariff policy. Yet, the tariff pressure on companies to adjust orders and inventories poses a challenge to the nation's foreign trade and domestic demand.
Trump's tariff hikes are expected to cause turmoil in global trade and a decline in demand. Many research institutes predict decelerated GDP growth in the second half of the year, with growth of about 1% from a year earlier.
Taiwan, as an export-oriented economy, is expected to bear the brunt of the impact from Trump's tariff policy in the upcoming months. The ongoing Section 232 investigation in the US could impose tariffs on semiconductors and ICT products, which make up more than 70% of Taiwan's exports to the US.
The potential impacts of US tariffs on Taiwan's economy, especially on its semiconductor industry, appear limited in the near term but with important caveats. According to recent analyses, the immediate effect on Taiwan’s overall competitiveness is not expected to be major. Taiwan’s semiconductor sector remains highly specialized and in demand globally, somewhat insulating it from abrupt changes in trade policy.
However, the US continues modifying reciprocal tariff rates on various countries to address trade imbalances and national security concerns. If Taiwan were subject to higher tariffs under this policy, it could lead to increased costs for Taiwanese exports to the US or supply chain disruptions, particularly in semiconductors, which are critical to the global electronics industry.
Taiwan’s semiconductor industry is central to global supply chains and is geopolitically significant. This strategic importance could influence tariff policies to avoid harming vital semiconductor supply lines, but also makes Taiwan vulnerable to geopolitical tensions impacting trade.
In summary, while US tariffs might not cause a major immediate shock to Taiwan's export-led economy or semiconductor industry, there is potential for longer-term effects through trade tensions, supply chain adjustments, and evolving US trade and security policies. The semiconductor sector’s complexity and geopolitical role could be both a buffer and a risk factor depending on future tariff impositions and diplomatic developments.
- The ongoing trade tensions between Taiwan and the United States, particularly regarding semiconductors and ICT products, are a point of interest in both the technology and finance industries.
- The potential impacts of US tariffs on Taiwan's semiconductor industry are not only relevant to general news but also to politics, as they could influence trade policies and geopolitical tensions.
