Business sentiment in Taiwan’s manufacturing, services, and construction sectors deteriorated in April, according to a monthly report by the Taiwan Institute of Economic Research (TIER). The decline is largely attributed to trade tensions following U.S. President Donald Trump’s tariff policies, first announced on April 2.
While headline numbers showed a marked dip in business confidence, economists in Taipei struck a more measured and cautiously optimistic tone when presenting the outlook.
📉 Sharp Downturn Across All Major Sectors:
- Manufacturing Sector Confidence dropped 3.53 points to 90.90, reaching the lowest level since July 2023.
- Service Sector Index fell to 85.41, marking the lowest since May 2020, and extending a four-month decline.
- Construction Confidence declined to 90.38, its worst performance since December 2020.
According to TIER, uncertainty from frequent policy shifts in the U.S. disrupted global procurement strategies and clouded the investment climate, which in turn affected local sentiment.
“Frequent policy shifts and uncertainty in the United States have undermined global manufacturing procurement and production schedules,” TIER said.
💡 Original Insights & Expert Commentary:
Despite the grim numbers, TIER President Chang Chien-yi noted that much of the uncertainty was now behind, especially after the temporary suspension of full reciprocal tariffs.
💼 The AI Surge – A Buffer Against Tariff Shock
One standout positive: Taiwan’s exports surged 20.62% between January and April 2025 compared to the same period last year. This growth was largely driven by artificial intelligence (AI) products and front-loaded purchases in anticipation of tariff hikes.
This export boom contributed to a 21.5% increase in Taiwan’s trade surplus, reaching US$30.834 billion during the first four months of the year.
🔄 Tariff Delay Sparks Stockpiling:
On April 2, President Trump announced reciprocal tariffs against several countries, including Taiwan. However, within a week, he implemented a 90-day delay, applying a 10% interim tariff instead of the full increase.
This back-and-forth prompted foreign buyers to rush orders, boosting Taiwan’s exports in April.
“The 90-day suspension of reciprocal tariffs drove customers to actively stock up,” TIER noted.
🏛️ Domestic Economic Stimulus in the Pipeline
TIER President Chang expressed optimism about upcoming domestic stimulus, hinging on the release of NT$410 billion (US$13.69 billion) in frozen government funds. Once approved, these funds aim to:
- Boost consumer spending
- Strengthen Taiwan’s economic resilience
- Offset the effects of global tariff changes
🌍 Global Risk Outlook Softens:
Gordon Sun, Director of TIER’s Economic Forecasting Center, remarked that initial fears of global economic disruption from U.S. tariffs have waned, especially after the U.S. resumed negotiations with China and the EU in May.
This de-escalation signals a possible cooling of global trade tensions, which would benefit Taiwan’s export-reliant economy.
🏘️ Housing Market Still Under Pressure
The construction sector, however, continues to suffer. According to Liu Pei-chen, a researcher at TIER:
“Buyers’ confidence was further shaken, making it difficult to reverse the housing market’s downward correction.”
🔚 Conclusion:
While Taiwan’s business sentiment faced headwinds in April due to global policy uncertainty, especially from the U.S., the nation’s economic fundamentals remain strong. With robust export performance in AI and a significant fiscal stimulus on the horizon, economists believe Taiwan can weather the storm and return to growth in the second half of 2025.
📋 FAQs
Why did Taiwan’s business sentiment fall in April?
Due to uncertainty surrounding U.S. tariffs announced by President Trump, which disrupted global supply chains and manufacturing.
What sectors were most affected?
Manufacturing, service, and construction sectors all recorded their lowest confidence levels in several years.
What is helping Taiwan’s economy amid these challenges?
Strong export growth driven by AI product demand and stockpiling before tariffs take full effect.
Will the situation improve soon?
Economists expect improvement if the government’s NT$410 billion stimulus package is approved and global trade tensions ease further.
How has Taiwan’s trade surplus been affected?
It grew by 21.5% year-on-year, reaching US$30.834 billion during the first four months of 2025.
