Tariff concerns could limit Taiwan's 2025 growth to 1.66%: CIER

Taipei, April 18 (CNA) Taiwan's economic growth could fall short of the 2 percent mark this year amid uncertainties posed by the United States' tariff policies, according to the Chung-Hua Institution for Economic Research (CIER) on Friday.

Speaking at a news conference, CIER President Lien Hsien-ming (連賢明) said his think tank made three estimates for growth based on optimistic, middle-ground, and pessimistic tariff scenarios.

The 2025 growth rate under the middle-ground (and most likely) scenario was 1.66 percent, Lien said.

U.S. President Donald Trump on April 2 announced "reciprocal" tariffs on countries with relatively large trade surpluses with the United States, including Taiwan, which was facing an across-the-board 32 percent import duty.

The White House then announced a 90-day pause on the new measures last week, with a 10 percent duty to be applied instead to all countries except China.

The neutral scenario took into account the 90-percent tariff pause and Trump's recent decision to exempt smartphones, computers and some other electronic devices from the "reciprocal" tariffs, Lien said.

It also assumed that the duty on Taiwan could likely rise from 10 percent to at least 15 percent after the 90-day pause, he said.

Under the optimistic scenario, the CIER president forecast that Taiwan could see 2.85 percent economic growth in 2025 if the tariffs continued to remain at 10 percent.

In the worst-case scenario, however, Taiwan's economic growth could fall to 0.16 percent should the global economy fall into a recession or experience stagflation.

Meanwhile, the CIER forecast that Taiwan's consumer price index (CPI) this year could either be 2.08 percent or 1.99 percent.

The biggest issue right now is uncertainty, as businesses do not know how the situation could unfold and are taking a wait-and-see approach, said Lien, who cautioned that White House's moves needed to continue to be closely monitored despite the 90-day pause.

He said people should not assume that Taiwan could negotiate with the Trump administration from a zero-tariff baseline, and felt Taiwan would be lucky if the outcome was 15 percent.

Trump's ideal goal is to bring manufacturing back to the United States, and if there were zero tariffs, companies would not feel compelled to invest in America, which is not what Trump wants, Lien said.

Given Taiwan's relatively large trade surplus with the United States, Lien estimated that the tariff rate on Taiwan could be around 15-20 percent, which he contended would be a fairly decent outcome.