Tariff Impact Lowers CIER's Economic Forecast to 1.66%
18 April 2025 · Uncategorized ·
Source: · https://finance.technews.tw/2025/04/18/tariff-economic-estimate-decrease/
US President Trump’s imposition of reciprocal tariffs has shaken the global economy and increased recession risks. The Chinese Academy of Economics Research (CIER) today released economic forecasts based on three scenarios, estimating that under a neutral scenario this year's GDP growth will fall short of 2%, dropping to 1.66%. In an extreme pessimistic situation where tariff wars prolong and lead major economies into recessions, Taiwan’s economy could barely maintain positive growth.
Since taking office in January, President Trump has successively imposed tariffs on Canada, Mexico, and China, reigniting trade tensions with retaliatory measures from other countries following suit. On April 2nd, 2025, he announced reciprocal tariff measures against over 180 nations globally but postponed their implementation for ninety days starting nine days later.
At today’s economic forecast press conference held by CIER, President Lian Hsien-ming stated that this prediction was made under extremely challenging circumstances due to uncertainties surrounding the tariffs. He predicted a higher probability of outcomes falling between optimistic and neutral scenarios.
CIER outlined three assumptions for an optimistic scenario: a ninety-day delay in US tariff implementation announced on April 9th, partial exemption of tech products from tariffs, and Taiwan facing only ten percent tax rates without triggering global economic recessions or stagflation. Under this scenario, Taiwan’s GDP growth rate would be at 2.85%.
In contrast to the optimistic assumptions, a neutral one assumes tariff rates for Taiwan higher than ten percent but still comparable with major competitors; under these circumstances, the estimated GDP is reduced to 1.66%. In an extreme pessimistic situation involving global economic recessions or stagflation, Taiwan’s growth rate could drop as low as 0.16%.
Regarding inflation trends, considering international commodity prices and domestic fee adjustments after US tariffs are imposed, CIER predicts that in optimistic and neutral scenarios the consumer price index (CPI) for 2025 would be at 2.08% and 1.99%, respectively.
Lian Hsien-ming noted that uncertainty is currently the biggest issue as businesses remain hesitant about future developments; although a ninety-day delay in tariffs has led to an influx of urgent orders, this situation may not last long. When asked about Taiwan’s impact from escalating US-China tariff wars, Lian stated that both major economies are significant trading partners for Taiwan and will inevitably affect it. However, assessing the extent is premature at present; he believes a deadlock between them won't persist indefinitely as they will eventually seek negotiations.
(Writer: Pan Ziyu)
Since taking office in January, President Trump has successively imposed tariffs on Canada, Mexico, and China, reigniting trade tensions with retaliatory measures from other countries following suit. On April 2nd, 2025, he announced reciprocal tariff measures against over 180 nations globally but postponed their implementation for ninety days starting nine days later.
At today’s economic forecast press conference held by CIER, President Lian Hsien-ming stated that this prediction was made under extremely challenging circumstances due to uncertainties surrounding the tariffs. He predicted a higher probability of outcomes falling between optimistic and neutral scenarios.
CIER outlined three assumptions for an optimistic scenario: a ninety-day delay in US tariff implementation announced on April 9th, partial exemption of tech products from tariffs, and Taiwan facing only ten percent tax rates without triggering global economic recessions or stagflation. Under this scenario, Taiwan’s GDP growth rate would be at 2.85%.
In contrast to the optimistic assumptions, a neutral one assumes tariff rates for Taiwan higher than ten percent but still comparable with major competitors; under these circumstances, the estimated GDP is reduced to 1.66%. In an extreme pessimistic situation involving global economic recessions or stagflation, Taiwan’s growth rate could drop as low as 0.16%.
Regarding inflation trends, considering international commodity prices and domestic fee adjustments after US tariffs are imposed, CIER predicts that in optimistic and neutral scenarios the consumer price index (CPI) for 2025 would be at 2.08% and 1.99%, respectively.
Lian Hsien-ming noted that uncertainty is currently the biggest issue as businesses remain hesitant about future developments; although a ninety-day delay in tariffs has led to an influx of urgent orders, this situation may not last long. When asked about Taiwan’s impact from escalating US-China tariff wars, Lian stated that both major economies are significant trading partners for Taiwan and will inevitably affect it. However, assessing the extent is premature at present; he believes a deadlock between them won't persist indefinitely as they will eventually seek negotiations.
(Writer: Pan Ziyu)