Taiwan’s semiconductor-driven economy is expected to remain on a steep growth trajectory this year, as changes to US tariff policies are unlikely to undermine the growth momentum facilitated by Taiwan’s manufacturing technology leadership and capacity readiness amid artificial intelligence (AI) infrastructure spending sprees.
The US Supreme Court last week ruled that US President Donald Trump’s “reciprocal” tariffs were unlawful. Trump has since pushed for a new 15 percent tariff on imports from all trade partners from yesterday.
Taiwan is expected to be unscathed from the changes after last month securing a trade pact with the US under Section 232 of the Trade Expansion Act, which grants Taiwan “most favored nation” tax rates on semiconductors and electronic devices, including smartphones.
Washington in April last year said it planned to impose a 100 percent tariff on semiconductors and related goods, which would have accounted for more than 76 percent of Taiwan’s total exports and one-third of exports to the US, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said at the time.
Last year, Taiwan exported about US$200 billion of goods to the US, with more than 81 percent being information and communications technology products, including chips, the DGBAS said.
Taiwan’s “most favored nation” status is not likely to be affected by the court’s decision to strike down Trump’s “reciprocal” tariffs on US trade partners under the 1977 International Emergency Economic Powers Act, the government said yesterday.
With the preferential treatment, Taiwanese exporters still have an advantage over rivals in South Korea and Japan even with the court’s ruling. Based on the trade deal with the US, Taiwan faces the same 15 percent as South Korea and Japan do, and they are still negotiating for lower rates under Section 232.
Most economists, industry analysts and investment consultancies also expect the tariff rule changes to have a limited effect on Taiwan’s economy in the initial stage. SinoPac Securities Investment Service Corp projected that Taiwan’s GDP would grow 7.53 percent annually this year as the semiconductor sector, a main pillar of Taiwan’s economy, would not be affected by the changes.
SinoPac’s estimate is slightly lower than the 7.71 percent the DGBAS projected for this year, more than doubling its earlier estimate of 3.54 percent in November last year. GDP last year was 8.68 percent, the highest in 15 years, the DGBAS said. The agency attributed the robust economic outlook to AI infrastructure investment sprees by major US-based cloud service providers such as Amazon Web Services, Microsoft Corp, Meta and Google, which have outlined lavish plans for purchases of servers and data centers in an attempt to cope with the voracious appetite for AI computing power.
The spending is fueling overwhelming demand for chips, mainly AI chips produced by Taiwan Semiconductor Manufacturing Co and AI-related hardware, such as AI server racks made by Hon Hai Precision Industry Co.
The AI boom is powering exports and leading to a structural shift in their composition, the DGBAS said.
The AI effect is expected to be “expansive and durative,” the agency said in a statement on Feb. 13, before Trump’s “reciprocal” tariffs were deemed unconstitutional.
Exports this year are expected to jump 22.22 percent annually to a record US$783.1 billion, the DGBAS said.
It added that although top semiconductor manufacturers have invested in building fabs in the US, Japan and Germany since 2021, “strong demand for AI infrastructure-related hardware remains robust and continues to far exceed production capacity.”
Nevertheless, there is uncertainty ahead. Some experts say that a “wait-and-see” approach would be best for the government, as US tariff policy remains fluid. That might be wise, as rash behavior might lead to undesirable outcomes, especially as Taiwan last year had the fourth-largest trade deficit with the US, mainly driven by high demand for AI chips and servers.
During the long Lunar New Year’s holiday, Taiwan has shown several positive developments in different aspects of society, hinting at a hopeful outlook for the Year of the Horse, but there are also significant challenges that the country must cautiously navigate with strength, wisdom and resilience. Before the holiday break, Taiwan’s stock market closed at a record 10,080.3 points and the TAIEX wrapped up at a record-high 33,605.71 points, while Taipei and Washington formally signed the Taiwan-US Agreement on Reciprocal Trade that caps US tariffs on Taiwanese goods at 15 percent and secures Taiwan preferential tariff treatment. President William Lai (賴清德) in
China has apparently emerged as one of the clearest and most predictable beneficiaries of US President Donald Trump’s “America First” and “Make America Great Again” approach. Many countries are scrambling to defend their interests and reputation regarding an increasingly unpredictable and self-seeking US. There is a growing consensus among foreign policy pundits that the world has already entered the beginning of the end of Pax Americana, the US-led international order. Consequently, a number of countries are reversing their foreign policy preferences. The result has been an accelerating turn toward China as an alternative economic partner, with Beijing hosting Western leaders, albeit
Chinese Nationalist Party (KMT) Deputy Chairman Hsiao Hsu-tsen (蕭旭岑) earlier this month led a delegation to Beijing to attend a think tank forum between the KMT and Chinese Communist Party (CCP). After returning to Taiwan, Hsiao spoke at length about “accumulating mutual trust” and letting matters “fall into place,” portraying the forum as a series of discussions focused on cooperation in tourism, renewable energy, disaster prevention, emerging industries, health and medicine, and artificial intelligence (AI). However, when the entire dialogue presupposes the so-called “1992 consensus — the idea that there is only “one China,” with each side of the Taiwan
As red lanterns adorn street corners and social media feeds teem with zodiac divinations, the Year of the Horse has arrived. In our hyper-accelerated age, the horse is almost exclusively synonymous with the idiom ma dao cheng gong (馬到成功) — “instant success upon arrival.” It is a linguistic shot of adrenaline, fueling the thrilling illusion that once the bell tolls, our lives would screech off into a cloud of dust, leaving all troubles behind. Yet, when examining the millennia-long partnership between humans and this magnificent “biological machine,” a different truth emerges. The true essence of the horse is not merely speed;
RSS