Wed, Apr 04, 2018 - Page 12 News List

Ministry raises concerns over possible effects of trade war

SQUEEZING DEMAND:The government would prepare measures if the local high-tech sector is affected by US-China tensions, deputy minister Hsu Yu-chin said

Staff writer, with CNA

The Ministry of Science and Technology yesterday raised concerns over the potential effects of a full-blown trade war between the US and China on Taiwan’s high-tech industry.

The looming trade war between Washington and Beijing is expected to hurt the global economy and constrain global demand, Deputy Minister of Science and Technology Hsu Yu-chin (許有進) said.

Sixty percent of Taiwan’s GDP comes from exports, with high-tech gadgets an important focus, Hsu said.

As a result, the tech sector will inevitably be affected by trade frictions between the world’s two biggest economies, he said.

US President Donald Trump on March 22 signed an executive memorandum imposing tariffs on US$60 billion of Chinese goods.

Washington would issue the details of the measures against China by Friday

Market analysts expect the tariffs to target China’s high-tech products at a time when Chinese authorities are gearing up to cultivate their own tech supply chain.

Many Taiwanese tech firms that have production sites in China could be affected, they said.

Among the Taiwanese tech manufacturers to have invested in China are Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, Advanced Semiconductor Engineering Inc (日月光半導體), the world’s largest integrated circuit designer, and Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker.

Prior to Washington’s release of the tariffs’ details, Beijing on Monday announced 15 to 25 percent tariffs on 128 US products, including pork and fruits, which is being viewed as a direct response to Trump’s March 8 order to impose a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum.

Hsu said even if the tariffs following the March 22 memorandum do not target Chinese tech products, trade frictions between China and the US are expected to squeeze global demand and send ripples through financial markets.

As Taiwan’s equity market is highly correlated to Wall Street, such interruptions are likely to affect many local tech stocks that are critical to movements on the broader market, Hsu said.

The bellwether electronics sector generally accounts for 60 to 70 percent of total turnover on the local main board with TSMC being the most heavily weighted stock on the market.

Hsu said trade frictions between Washington and Beijing are just the beginning, and he hopes the two sides iron out their differences.

However, if the local high-tech sector is affected, the ministry would prepare measures to help mitigate the difficulties faced by Taiwanese firms, he said.

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