Business confidence last month declined as companies fretted about US threats of “reciprocal” tariffs, but breathed a sigh of relief after Washington and Beijing agreed to step back from an all-out trade war, a survey by the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) found yesterday.
Business sentiment among local manufacturers came in at 90.9, a drop of 3.53 points from March to a two-year low and down for three months straight, as firms sought unsuccessfully to make sense of US President Donald Trump’s trade policy.
Trump on April 2 announced heavy “reciprocal” tariffs on US trade partners, including 32 percent on Taiwanese goods, but declared a 90-day pause a week later.
Photo courtesy of TIER
The backdrop explained why only 18.2 percent of manufacturers reported better performance last month, a plunge of 14.4 percentage points from one month earlier, the institute said.
Meanwhile, companies that posted a decline in business soared 12.7 points to 37.4 percent, it said.
Asked about prospects, 22.9 percent expect their business to improve in next six months, rising from 19.4 percent one month earlier, while manufacturers with a pessimistic outlook dropped 3.7 percentage points to 29.2 percent, the survey showed.
The easing in trade tensions between the US and China late last month prompted global companies to take advantage of the 90-day respite and build inventory, despite lingering uncertainty, TIER Economic Forecasting Center director Gordon Sun (孫明德) said.
The Taiwanese economy might still grow 3 percent this year if Trump demonstrates flexibility and softens tariffs on imports from around the world, TIER president Chang Chien-yi (張建一) said.
Chang expressed hope that the US might set a 15 percent tariff on Taiwan’s goods if bilateral trade talks fare well.
The confidence reading on service providers weakened 3.03 points to 85.41, as financial firms and hospitality operators took a hit from the stock rout and the New Taiwan dollar’s sharp appreciation affected the profitability of exporters and life insurers, Sun said.
While private consumption held resilient and lent support to sales of wealth management products, economic uncertainties at home and abroad warranted a cautious approach in doing business generally, the economist said.
The sentiment gauge for construction firms and real-estate brokers slid 2.98 points to 90.38, falling for four consecutive months, TIER’s Taiwan Industry Economics Database researcher Arisa Liu (劉佩真) said.
Liu said the housing market has slowed for a while and might not turn around anytime soon, in light of the central bank’s continued loan restrictions and the US tariff drama.
Nvidia Corp’s plan to expand its presence in Taipei’s Shilin District (士林) would benefit the neighborhood, but is not strong enough to bolster the whole market, Liu said.
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