A general view of a container terminal and the port during sunset in Keelung, Taiwan, June 10, 2020. REUTERS/Ann Wang
TAIPEI, Taiwan — Taiwan’s export-driven economy accelerated faster than expected in the first quarter of 2025, official data showed Wednesday, fueled by strong global demand for high-tech products and firms stocking up in case of higher US tariffs.
The island of 23 million people is a powerhouse in the semiconductor industry, with nearly all of the world’s most advanced chips made there.
Soaring demand for AI-related chips in recent years has fueled Taiwan’s trade surplus with the United States — and put it in the cross-hairs of US President Donald Trump and his far-reaching tariffs.
Gross domestic product (GDP) expanded 5.4 percent on-year in the first quarter, the fastest pace in a year, the government’s statistics agency said in a statement, beating a Bloomberg News estimate of 3.6 percent and fourth-quarter growth of 2.9 percent.
“Demand for AI and emerging technology applications remains strong, supply bottlenecks for high-end ICT products are gradually easing, and customers are front-loading inventory in response to US tariff measures,” the statement said.
Trump tariffs
Taiwan was hit with a 32 percent levy on its shipments to the United States on April 2 when Trump announced hefty tariffs against many US trading partners.
The tolls were suspended for 90 days after trillions of dollars were wiped off world markets, but a 10 percent blanket tariff remains in place.
Taiwan’s negotiating team has held talks with the Trump administration to reduce the levy.
READ: Taiwan says first tariff talks held with US
Its trade surplus with the United States is the seventh highest of any country, reaching $73.9 billion in 2024.
Around 60 percent of its exports to the United States are information and communications technology products, including semiconductors.
Taiwan also exports bicycles, auto parts and machine tools.
The cabinet last week announced a planned special budget of up to NT $410 billion (US$12.8 billion) to shield the economy against the impact of the new US tariff.
All eyes on chips
London-based Capital Economics senior Asia economist Gareth Leather raised his full-year growth forecast to 5.4 percent from 3.9 percent following the latest data.
“Although Trump’s tariffs pose a downside threat to the economy, we expect growth to remain strong, helped by continued rapid growth in information and communication technology exports,” Leather said in a note.
Taiwan had sought to avoid Trump’s threatened levy by pledging increased investment in the United States, more purchases of US energy and greater defense spending.
Chips were excluded from the tariffs, but an ongoing US “national security” probe into the sector could pave the way for a levy.
But Leather said tariffs on Taiwanese chips would not have a big impact on the island’s economy, given its dominance in the sector.
“It accounts for around 60 percent of global production and over 90 percent of the most advanced chips — importers would have little alternative to paying extra,” Leather said.