The latest foreign trade data released by the Ministry of Finance on Thursday last week showed that Taiwan’s exports for the whole of last year grew 9.9 percent year-on-year to US$475.07 billion, the second-highest on record after US$479.41 billion in 2022.
The result came as exports last month recorded better-than-expected 9.2 percent annual growth — also the 14th consecutive month of increases — at US$43.59 billion, thanks to strong demand for products involving high-performance computing and artificial intelligence (AI), as well as a surge in orders placed with Taiwanese businesses ahead of the Lunar New Year holiday and US president-elect Donald Trump’s inauguration, the ministry said.
Among the major markets, exports to China (including Hong Kong) decreased 1.1 percent year-on-year to US$150.62 billion, the third consecutive year of decline. The ministry said this phenomenon is unprecedented, adding that the proportion of exports to China (including Hong Kong) dropped to 31.7 percent of total exports, a 23-year low.
The data also showed that Taiwan’s trade surplus with China and Hong Kong hit an eight-year low last year at US$69.996 billion, and the gap between the trade surplus with China and Hong Kong and the US$64.88 billion with the US was the smallest in 32 years.
Among major export markets, the US and ASEAN ranked second and third-largest, with shipments of US$111.37 billion and US$87.79 billion respectively, up 46.1 percent and 15.1 percent from the previous year each. Europe and Japan ranked fourth and fifth, but shipments to the two markets fell 8.6 percent and 17.8 percent to US$38.64 billion and US$25.84 billion respectively, the data showed.
Shipments to South Korea increased 14.2 percent to US$20.79 billion last year, with the country replacing Japan as Taiwan’s largest trade deficit country. That is due to South Korea becoming a main supplier of electronic components, such as high-bandwidth memory chips, to local AI developers.
Meanwhile, Taiwan’s trade deficit with South Korea reached US$22.92 billion last year, surpassing the deficit with Japan — US$20.63 billion last year — for the first time.
What deserves attention is that Taiwan’s trade surplus with the US jumped 83.53 percent year-on-year to US$64.88 billion in the year — reaching 23.4 percent of Taiwan’s total exports, the highest in 24 years — which increases the chances of the nation becoming a target of tariffs proposed by the incoming Trump administration.
Recent reports that Trump is considering declaring a national economic emergency by using the International Economic Emergency Powers Act (IEEPA) to push his tariff plans through have only added to market uncertainty.
Under the IEEPA, Trump would be allowed to rapidly designate tariff rates and discuss tariff imposition with US Customs and Border Protection authorities.
The Ministry of Economic Affairs’ preliminary assessment found that the move would affect Taiwan’s auto parts, high-end servers, laptops and desktops destined for the US market.
It remains unclear how soon Trump’s declaration could occur, but for the most part, it would likely be a negotiating tool to exert diplomatic pressure, as in 2019 when Trump during his first term used it to address illegal immigration from Mexico.
Potential Trump tariffs might have a relatively manageable impact on Taiwan’s trade position — across-the-board tariffs require US Congress approval and would only come after negotiations and trade investigations. However, risks still abound from possible retaliatory tariffs by other countries to counter the US’ actions, which would affect global trade and thus harm export-reliant Taiwan.
As Trump’s tariff threat looms, the economic and political consequences warrant a rethink.
