TAIPEI, Taiwan – The Central Bank of the Republic of China (Taiwan) has assessed that the risk posed to Taiwan by potential tariff increases from the incoming US administration remains relatively low. This analysis comes in light of the Trump Risk Index, which evaluates countries based on their exposure to potential tariffs.
US President-elect Donald Trump has indicated he may significantly increase tariffs on imports, particularly from China, a decision that raises concerns about global trade dynamics. However, the Central Bank’s report categorizes Taiwan as a low-risk nation in the context of these tariff threats.
The Trump Risk Index employs quantitative metrics across four key areas—military spending, trade balance, stance on China, and anti-US policies—to determine which countries may be subject to new tariffs or retaliatory actions.
The Central Bank noted that Taiwan ranks high only in the trade balance category while maintaining low risks in military spending, relations with China, and anti-US sentiment. With consideration to Taiwan’s trade balance with the United States relative to its gross domestic product (GDP), the central bank also emphasized that the upcoming administration will likely evaluate Taiwan’s military expenditure and its economic ties with both China and the US.
In the index, Taiwan received a score of 1.33, indicating a lower risk profile when compared to South Korea (0.16) and Japan (0.36), where lower index scores represent higher risks.
Furthermore, the Central Bank highlighted Taiwan’s robust semiconductor and information and communications technology sectors, which are adept at producing advanced technology products. Consequently, any adverse effects from potential tariff hikes on these industries are expected to be minimal. Nonetheless, there are concerns that such tariffs could disrupt Taiwan’s semiconductor capabilities, impact industrial clusters, and affect exports, investments, and job markets.
Research from the International Monetary Fund anticipates that if the US enacts a 10 percent tariff on all imports, reciprocal actions from trading partners could ensue, impacting one quarter of global trade and leading to significant economic losses over an extended period.
Academia Sinica has indicated a strong economic correlation between Taiwan, the US, and China. If economic conditions deteriorate in the US and China, Taiwan is likely to experience negative repercussions. Economists predict that Trump’s proposed tariff increases, alongside tax reductions, may contribute to a slowdown in global economic growth, heightening investment uncertainties across various nations.
The Chung-Hua Institution for Economic Research (CIER) forecasts Taiwan’s GDP growth to reach 3.1 percent by 2025. However, if the economies of the US and China remain stable, growth could increase to 3.2 percent, while a downturn could reduce it to 2.93 percent.
Despite the uncertainties introduced by Trump’s policies, CIER President Lien Hsien-ming indicated that advancements in artificial intelligence could propel global economic growth, suggesting a landscape where risks and opportunities coexist in 2025.
A recent CIER survey revealed that 28.7 percent of respondents in Taiwan’s manufacturing sector are either engaged in the AI supply chain or planning to develop AI applications to enhance their operations.
