Former US president Donald Trump’s return to the White House heralds a resurgence of economic turbulence. His emphasis on protectionist trade policies, exemplified by tariffs on Canada, Mexico and China, is already disrupting global markets. Currency and equity markets have reacted sharply to his “make America great again” rhetoric, leaving Taiwan to navigate immediate risks while strategizing for long-term growth.
Taiwan faces a dual imperative in this uncertain landscape: managing short-term volatility in an unpredictable global environment while securing sustainable economic growth. The country’s banking sector is uniquely positioned to play a central role in addressing those challenges by bolstering financial stability, fostering innovation and enabling resilience against external shocks.
Trump has fueled instability in global currency markets. The depreciation of the Canadian dollar and Mexican peso against the US dollar underscores the potential economic fallout from protectionist measures. The weakening of the New Taiwan dollar, coupled with heightened uncertainty in semiconductor exports, amplifies exposure to external shocks. Trump’s use of tariffs as tools for political objectives also signals a more volatile global economic environment, where financial and trade conflicts increasingly intertwine.
To navigate these challenges, Taiwan could consider diversifying its export markets and reducing dependence on the traditional US-China trade dynamic. Expanding trade ties with Southeast Asia, Europe and South Asia is essential to mitigating potential disruptions. While government initiatives such as the New Southbound Policy provide a framework for diversification, the banking sector’s participation would be critical. Banks must offer financial and advisory support to businesses exploring new markets, provide trade finance solutions and develop innovative instruments to hedge against currency risks. They should also facilitate overseas expansion for Taiwanese companies seeking opportunities in less volatile regions.
Stabilizing the New Taiwan dollar is another priority as Taiwan contends with global market turbulence. Collaboration between the banking sector and the central bank would be essential in monitoring and managing currency fluctuations. Establishing currency swap arrangements with key trading partners could also provide a buffer against uncertainty, while prudent risk management practices within the financial sector could help pre-empt potential crises.
The banking sector must play a proactive role in strengthening domestic supply chains. Industries that are central to Taiwan’s global competitiveness require substantial financial support to maintain leadership. Banks must channel resources into initiatives that encourage the reshoring of critical industries, promote technological advancements and attract foreign investment to enhance economic self-reliance and reduce vulnerability to external disruptions.
The transformative potential of green finance and artificial intelligence (AI) offers an additional avenue for growth. Green finance could align economic development with environmental sustainability by funding renewable energy projects, energy-efficient infrastructure and sustainable supply chains. That approach not only strengthens Taiwan’s international reputation as a high-tech leader, but also provides the banking sector with opportunities to establish new revenue streams.
Similarly, AI could revolutionize the banking industry. AI-driven analytics improve risk assessment, operational efficiency and customer experience, while advanced technologies enhance capabilities in areas such as fraud detection, compliance monitoring and cybersecurity. Banks could better anticipate market trends and respond swiftly to economic shifts. Integrating AI into the banking sector would reinforce Taiwan’s role in the international financial ecosystem.
Taiwan’s leadership in high-tech industries gives it a strategic advantage in shaping global trade dynamics. The banking sector could amplify that by financing research and development, fostering international collaborations and supporting industries pivotal to the global economy, such as AI and green technology.
Trump’s return might heighten economic risks, but it is also an opportunity to redefine Taiwan’s global economic role. The nation’s ability to adapt and innovate would determine its resilience in the face of new challenges. By prioritizing diversification, financial stability and technological advancement, it could mitigate the risks posed by an unpredictable global environment and position itself for sustainable growth.
The banking sector would be instrumental in this transformation. By strategically investing in green finance, AI and critical industries, Taiwanese banks could turn challenges into opportunities, enabling the nation to thrive amid complexity. Through a cohesive approach that leverages strengths in technology, sustainability and financial innovation, Taiwan could chart a path toward long-term stability and prosperity, solidifying its role as a resilient and forward-thinking economic power.
Darson Chiu is the secretary-treasurer of the Asian Banker Association.
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