Taiwan’s manufacturing sector began the year on a firm footing, with sentiment last month up for the seventh straight month as easing tariff headwinds and resilient global demand reinforced exporters’ confidence, despite uncertainty over US trade policy, the Taiwan Institute of Economic Research (TIER, 台經院) said yesterday.
TIER’s manufacturing business climate index last month rose 1.27 points from a month earlier to 98.44, reflecting better-than-expected results from Taiwan-US trade talks and early signs of a pickup in global demand, the Taipei-based institute said.
The improvement came as exporters welcomed greater clarity over US tariff arrangements.
Photo: CNA
However, a new cloud emerged on Friday last week, when the US Supreme Court ruled that the International Emergency Economic Powers Act does not authorize US presidents to impose tariffs.
The decision effectively invalidated the broad “reciprocal” tariffs introduced last year by US President Donald Trump.
TIER economist Gordon Sun (孫明德) said that the ruling removed what he described as the “most lethal weapon” in Washington’s tariff arsenal.
“Reciprocal tariffs have the widest scope and the greatest room for raising rates,” Sun said, adding that other trade tools that Washington can use — such as Section 232 and Section 301 investigations — require time-consuming probes and cannot be implemented immediately.
Although Trump has invoked Section 122 to levy a 15 percent global tariff on top of “most favored nation” rates, Sun said that the provision is capped at five months and limited to a maximum 15 percent rate, making it less potent than the now-invalidated “reciprocal” tariffs.
“When you lay out the available tariff tools, the most damaging one has been scrapped,” Sun said, adding that while the policy environment remains fluid, overall tariff pressure this year should be lighter than last year.
Still, Taiwan’s highly concentrated industrial structure leaves it exposed if semiconductors, and information and communications technology products become direct targets.
However, the government has gained concrete headway in mitigating risks through trade negotiations, he said.
The services sector gauge climbed for a fourth straight month to 95.47, while the construction industry index slipped to 99.92, the TIER said.
Ongoing rallies on the TAIEX are generating wealth effects that could bolster private consumption, Sun said.
On the property front, TIER researcher Arisa Liu (劉佩真) said that the housing market remained decoupled from broader economic and equity market trends.
With the central bank maintaining tight credit controls and banks adopting a cautious stance, the residential sector is expected to remain in a consolidation phase in the near term.
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