Economic confidence in Taiwan has significantly decreased this month, according to a survey by Cathay Financial Holding Co released on April 20, 2025.

Concerns over potential US “reciprocal” tariffs have dampened consumer and investor outlooks.

The current economy index fell to minus-44.5, while the outlook index dropped to minus-41.3.

Consumer sentiment also weakened, with the durable goods consumption index falling to minus-18.3.

Inflation concerns were significant, with respondents anticipating a 2.33% rise in consumer prices, exceeding the DGBAS forecast of 1.94%.

Approximately 70% of participants expect inflation to surpass 2%.

The survey, conducted from April 1 to 7, included 13,693 valid online responses from clients of Cathay Life Insurance Co and Cathay United Bank Co, both subsidiaries of Cathay Financial.

🔗 Source: Taipei Times

🧠 Food for thought

1️⃣ Taiwan’s pivot from trade winner to potential casualty

Taiwan’s economic position has undergone a dramatic reversal in the US-led trade landscape, showing how vulnerable export-dependent economies can be to shifting policy winds.

During Trump’s previous presidency, Taiwan notably benefited when US tariffs on China prompted manufacturers to relocate supply chains to Taiwan, boosting its economy while supporting US national security interests 1.

This historic advantage has now reversed, with the US imposing a substantial 32% tariff on Taiwanese goods despite the complementary nature of Taiwan-US trade, particularly in critical sectors like semiconductors and AI-related products 1.

The economic impact is already quantifiable, with the National Development Council warning that Taiwan’s growth could shrink by as much as 1.61 percentage points, potentially reducing annual GDP growth from the originally forecasted 3.14% to just 1.53% 2.

This rapid shift illustrates the precarious position of smaller economies caught between competing major powers, regardless of their strategic importance in global supply chains.

2️⃣ Trade tensions create widespread economic spillover effects