New US Tariffs Threaten to Derail Taiwan's Economic Growth

Taipei is grappling with the economic impacts of new US tariffs, potentially causing a significant dip in GDP growth for 2025. Government leaders are initiating measures to support local industries, while maintaining open channels of negotiation with Washington to reach a favorable trade solution.

The imposition of new US tariffs on Taiwan has triggered concerns about the island's economic stability, with officials predicting a sharp GDP downturn in 2025. National Development Council (NDC) Minister Paul Liu informed lawmakers of potential GDP growth reductions, ranging from 0.43 to 1.61 percentage points, based on early assessments by a private research body.

These 32 percent tariffs, effective yesterday, threaten to cut Taiwan's GDP growth, possibly reducing it from above 3 percent to as low as 1.53 percent. This forecast starkly contrasts the 3.14 percent growth predicted by the Directorate-General of Budget, Accounting and Statistics in February. To accurately gauge the situation, the government is commissioning further research into both immediate and long-term economic effects.

In response to the economic downturn, legislators are debating the sufficiency of existing support for affected industries. Democratic Progressive Party (DPP) Legislator Lee Kuen-cheng questioned the NTD 88 billion (USD 2.67 billion) relief fund's adequacy, prompting Minister of Economic Affairs J.W. Kuo to note that while the fund isn't expanding at present, adjustments could be made depending on sector needs. Kuo conveyed confidence in ongoing negotiations with the United States, suggesting potential positive outcomes.

A government task force, spearheaded by Vice Premier Cheng Li-chun, has been formed to manage the tariff situation. This team, consisting of representatives from various sectors, is actively engaging Washington to formulate viable solutions without resorting to retaliatory actions. NSC Director-General Tsai Ming-yen highlighted last weekend's US discussions as part of the Taiwanese strategic approach.

Domestically, measures are expanding to aid businesses facing tariff pressures. Minister Kuo announced enhancements to the Ministry of Economic Affairs' support services, ensuring rapid and customized assistance for companies. Financial aid requirements are also being relaxed, providing broader access to loans and subsidies to bolster the traditional manufacturing and SME sectors, which form the backbone of Taiwan's economy.

(With inputs from agencies.)