The United States has announced a 32% reciprocal tariff on Taiwanese exports, raising concerns that Taiwan’s gross domestic product (GDP) faces a significant decrease. Scholars are divided on the potential impact, with some suggesting there is room for negotiation and that current models may overstate the damage. Others warn of a cascading effect that could stall Taiwan’s key economic drivers, possibly tipping the island into negative growth this year.
Analyzing U.S. President Donald Trump’s sweeping tariff plan, Bloomberg economists projected a 3.8% GDP contraction for Taiwan due to a steep drop in exports to the U.S.—with shipments reportedly plunging 63%.
In response, Vice President of the Chung-Hua Institution for Economic Research (CIER) Wang Jiann-chyuan (王健全) said in an interview Friday that the 32% rate is not final and businesses have options to adapt, such as rerouting semi-finished goods through third countries or even investing directly in the U.S.
However, Director-General of the Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI) Dr. Darson Chiu (邱達生) said Taiwan’s economy depends primarily on exports, followed by consumption and investment. The tariffs could severely impact Taiwan’s exports, including intermediate goods sold to Southeast Asian countries, which in turn could trigger a broader economic slowdown.
Finally, Chiu noted that Taiwan still has monetary tools at its disposal, including room for interest rate cuts. He noted that the government has not used surplus tax revenue for widespread cash handouts this year, leaving some fiscal ammunition available. He urged authorities to prepare domestic stimulus measures to support consumer demand should the situation worsen.