Taiwan could see a decline in exports and GDP growth due to the US’ implementation of a 32 percent “reciprocal” tariff on Taiwanese goods from yesterday, economists said yesterday.
Taiwan’s exports to the US are likely to dampen in the coming 12 months, with a direct impact on GDP ranging from 1.2 to 2.5 percentage points, depending on the elasticity of US import demand, Standard Chartered Bank senior economist Kelvin Lau (劉建恆) said.
Taiwan’s tech sector — especially firms supplying advanced chips and information communications technology products — is expected to be less affected by the tariffs due to their global technology leadership positions.
Photo: CNA
The actual economic blow could be milder, as other competing markets are also subject to tariff barriers, he said.
“While the short-term pain is real, Taiwan’s relative competitiveness won’t be substantively eroded,” Lau said.
Taiwan’s central bank is expected to hold interest rates steady this year with the consumer price index expected to hover at about 2.1 percent, he said.
Standard Chartered stood by its forecast of 3 percent for Taiwan’s GDP growth this year, but it has seen intensifying downside risks, he added.
Allen Liu (劉家豪), head of wealth management strategy at Standard Chartered, urged Taiwanese manufacturers to assess the substitutability of their products in the global market.
“If there are no viable alternatives elsewhere, they may have stronger bargaining power with US companies and pass tariff costs onto US importers,” Liu said.
Further, the US does not have a supply chain of electronics and it would not be easy to move production lines to the US quickly, he said.
How Washington implements its tariff policy would shape related firms’ global deployment, he added.
Although the US claims economic strength, it is also under pressure to speed up trade negotiations, and US-Taiwan trade talks merit close attention, Liu said.
Moody’s shared similar observations, saying that Trump’s sweeping new tariffs represent the largest increase since the 1930s and the implications are unfolding across the world.
The new tariffs on Asian markets turned out more draconian than expected, which is unfavorable for the region, the ratings agency said.
The region is exposed to higher US tariffs directly and indirectly, it said, adding that direct exposure is the heaviest for economies such as Taiwan, China and Vietnam.
“This major shift in US trade policy is credit negative for the region, but we expect the vast majority of countries to negotiate rather than to retaliate through strategies such as establishing bilateral trade agreements or buying more US goods,” Moody’s said.
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