The US overtaking China as Taiwan’s top export destination could boost industrial development and wage growth, given the US is a high-income economy, an economist said yesterday.
However, Taiwan still needs to diversify its export markets due to the unpredictability of US President Donald Trump’s administration, said Chiou Jiunn-rong (邱俊榮), an economics professor at National Central University.
Taiwan’s exports soared to a record US$51.74 billion last month, driven by strong demand for artificial intelligence (AI) products and continued orders, with information and communication technology (ICT) and audio/video products leading all sectors.
Photo: CNA
The US reclaimed its position as Taiwan’s top export market, accounting for 30 percent of total exports — surpassing the combined 27.2 percent share of China and Hong Kong.
Commenting on the structural shift in Taiwan’s exports, Chiou noted that Taiwan’s previous heavy dependence on China — once exceeding 40 percent of total exports — raised concerns about over-concentration in a single market and product.
However, global supply chain realignments and rising US-China tensions have led to a significant shift in Taiwan’s export structure.
Chiou explained that although Taiwan’s export focus has shifted from the Chinese market and ICT products to the US market and AI goods, it may seem like the same story is repeating, but with different implications.
First, Chiou noted that since the US is the world’s largest economy, a 30 percent export share to the country is not excessive.
Second, the US is not only the world’s most important market but also a high-income, advanced economy, he said. While both the US and China are major export markets for Taiwan, their implications differ greatly, he added.
Looking back, Chiou recalled that when Taiwan signed the Economic Cooperation Framework Agreement with China in 2010, there were concerns that closer ties would lower wages and increase unemployment. He cited concerns over the economic theory of "factor price equalization," which suggests free trade equalizes wages and rents between countries.
In contrast, Chiou said deepening trade ties with the US could drive industrial development and wage growth in Taiwan. Closer access to end markets would help shift Taiwanese industries toward higher value-added segments, he added.
However, Chiou warned that to mitigate risks from Trump’s erratic policies, Taiwan should pursue greater export market diversification.
Gordon Sun (孫明德), director of the Economic Forecasting Center at the Taiwan Institute of Economic Research, said AI servers sold mainly to the US helped push America past China as Taiwan’s largest export market.
However, Sun said this structural shift in exports is largely driven by a single product category, and whether the trend will continue remains uncertain.
Merida Industry Co (美利達) has seen signs of recovery in the US and European markets this year, as customers are gradually depleting their inventories, the bicycle maker told shareholders yesterday. Given robust growth in new orders at its Taiwanese factory, coupled with its subsidiaries’ improving performance, Merida said it remains confident about the bicycle market’s prospects and expects steady growth in its core business this year. CAUTION ON CHINA However, the company must handle the Chinese market with great caution, as sales of road bikes there have declined significantly, affecting its revenue and profitability, Merida said in a statement, adding that it would
RISING: Strong exports, and life insurance companies’ efforts to manage currency risks indicates the NT dollar would eventually pass the 29 level, an expert said The New Taiwan dollar yesterday rallied to its strongest in three years amid inflows to the nation’s stock market and broad-based weakness in the US dollar. Exporter sales of the US currency and a repatriation of funds from local asset managers also played a role, said two traders, who asked not to be identified as they were not authorized to speak publicly. State-owned banks were seen buying the greenback yesterday, but only at a moderate scale, the traders said. The local currency gained 0.77 percent, outperforming almost all of its Asian peers, to close at NT$29.165 per US dollar in Taipei trading yesterday. The
RECORD LOW: Global firms’ increased inventories, tariff disputes not yet impacting Taiwan and new graduates not yet entering the market contributed to the decrease Taiwan’s unemployment rate last month dropped to 3.3 percent, the lowest for the month in 25 years, as strong exports and resilient domestic demand boosted hiring across various sectors, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. After seasonal adjustments, the jobless rate eased to 3.34 percent, the best performance in 24 years, suggesting a stable labor market, although a mild increase is expected with the graduation season from this month through August, the statistics agency said. “Potential shocks from tariff disputes between the US and China have yet to affect Taiwan’s job market,” Census Department Deputy Director Tan Wen-ling
UNCERTAINTIES: The world’s biggest chip packager and tester is closely monitoring the US’ tariff policy before making any capacity adjustments, a company official said ASE Technology Holding Inc (日月光投控), the world’s biggest chip packager and tester, yesterday said it is cautiously evaluating new advanced packaging capacity expansion in the US in response to customers’ requests amid uncertainties about the US’ tariff policy. Compared with its semiconductor peers, ASE has been relatively prudent about building new capacity in the US. However, the company is adjusting its global manufacturing footprint expansion after US President Donald Trump announced “reciprocal” tariffs in April, and new import duties targeting semiconductors and other items that are vital to national security. ASE subsidiary Siliconware Precision Industries Co (SPIL, 矽品精密) is participating in Nvidia
RSS