An index gauging Taiwan’s manufacturing sector weakened significantly in March, hurt by the economic uncertainty created by US President Donald Trump’s tariff threats, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The TIER’s economic composite index, which gauges the manufacturing sector’s health, fell sharply by 4.54 points from a month earlier to 12.12 in March, to enter the a yellow-blue spectrum of their system, indicating sluggish growth.
That compared with a yellow-red indicator seen in February and the yellow-blue shown in January, the institute said.
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TIER uses a five-color system to assess economic activity in the sector, with red indicating overheating, yellow-red showing fast growth, green representing stable growth, yellow-blue signaling sluggish growth and blue meaning contraction.
Trump’s unpredictability in repeatedly adjusting US tariff policies has driven up risks to global trade, the institute said.
His tariff policies have also sent ripples through stock markets, hurting sentiment among manufacturers, it said.
Among the five factors comprising the March composite index, the subindices on demand, the general business climate, purchases of raw materials, and pricing moved lower by 2.40, 1.15, 0.87 and 0.15 points, respectively from a month earlier, the institute said.
Only the subindex on costs bucked the downtrend, up 0.02 points from a month earlier in March, it said.
By sector, the electronics component and computer/optoelectronics sectors were in green territory in March, retreating from the red in February, as growth slowed down amid tariff uncertainties, the institute said.
The base metal industry felt the pinch of a weak global steel market and a decline in orders from Europe and China to enter blue territory in March, compared with yellow-blue in February, it said.
Although semiconductor suppliers increased their demand for equipment in March, the machinery industry showed signs of slowing down, flashing a green light in March after shining a red light in February as China pushed for domestic products to replace imported items, it added.
The TIER said risks in global trade are expected to increase amid Trump’s tariff policies, and the uncertainties that exist would affect business confidence worldwide and influence expansion strategies in global supply chains.
Those trends could negatively affect the strength of the local manufacturing sector, it said.
Also, Trump has threatened to impose tariffs on semiconductors. Those potential tariffs combined with US sanctions on chip exports to China could force Taiwan’s high-tech sectors to face new challenges, it said.
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