Taiwanese machine tool makers felt the pinch of the US-China trade spat over the past two months, as Chinese companies grew cautious in placing orders because of the heavy tariffs imposed by Washington, the Ministry of Economic Affairs said yesterday.
Export orders from China in September sank 21.7 percent year-over-year, followed by a 6.7 percent annual decline last month, a ministry report said.
September’s dip was the first decline in about 25 months, it said.
“Most machine tools shipped to China are used to produce goods for China’s domestic market, not re-exported to other places,” Department of Statistics Deputy Director-
General Wang Shu-chuan (王淑娟) said by telephone. “However, Chinese manufacturers are cautious about buying new machines as half of Chinese exports to the US are affected by heavy tariffs.”
The US launched a third wave of tariffs in September, levying a 10 percent tax on US$200 billion of Chinese goods, including consumer electronic products that were not on the first two lists. The levy is to climb to 25 percent on Jan. 1.
The US tariffs indirectly affect local manufacturers as about 90 percent of export orders received are made in China and about 23 percent of the raw materials, or components required, are shipped from Taiwan, the ministry said.
US President Donald Trump threatened to launch a new tariff list to include all products from China, which “will have an all-around impact,” Wang said, as numerous local companies are part of the iPhone supply chain, such as chipmaker Taiwan Semiconductor Manufacturing Co (台積電) and camera lens supplier Largan Precision Co (大立光).
On the plus side, the trade dispute has helped divert orders to local networking equipment and server suppliers, as their products are the main electronics subject to tariffs, Wang said.
Orders in the category that includes computers, electronics and optical products surged 23.9 percent year-on-year last month, marking the fastest growth in about seven years when seasonal factors are excluded, the report said.
Computers, mobile phones and tablets are exempt from existing tariffs.
Several manufacturers moved some production back to Taiwan, which also helped prop up orders, the ministry said.
Networking equipment manufacturers are prepared to open idle factories and recruit workers to handle new orders, it said.
“We feel some Taiwanese manufacturers are considering moving [production] back [home to avoid US tariffs],” Minister of Economic Affairs Shen Jong-chin (沈榮津) told reporters.
Most electronics firms that seek to relocate production from China opt for Taoyuan or Hsinchu to build new factories or expand capacity at existing plants, while bicycle manufacturers favor Taichung or Changhua, Shen said.
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