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.
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