Business sentiment among manufacturers weakens amid Trump tariffs

Taipei, April 26 (CNA) Business sentiment in the local manufacturing sector which has been adversely impacted by the Trump administration's tariff policies weakened in March, according to the Taiwan Institute of Economic Research (TIER).

Data compiled by TIER, one of the leading think tanks in Taiwan, showed the composite index gauging business sentiment among local manufacturers fell 2.71 points from a month earlier to 95.00 in March, the lowest level in five months.

TIER's composite index assessing business sentiment in Taiwan's service sector also move lower by 4.50 from a month earlier to 88.51, the lowest level in almost five years, while its composite index for the construction industry shed 7.53, dropping to 94.34, the lowest in nearly two years, the data indicated.

U.S. President Donald Trump's tariff threats have created uncertainties in the global economy and could hinder demand from end-users, slow the pace of industries in expansion and even hurt the real estate market, TIER said.

Citing a survey conducted in March, 34.0 percent of respondents said their business improved in the month, up from 29.5 percent in a similar poll conducted in February, while 21.7 percent of said their business deteriorated in March, down from 23.9 percent in February.

The results largely reflected an increase in rush orders as foreign buyers scrambled to build up their inventories to avoid Trump's tariffs, TIER added.

The March survey also found 19.7 percent of respondents believe their business will improve over the next six months, down sharply from 35.1 percent in February, while 29.8 percent said their business will deteriorate over the next six months, up significantly from 12.6 percent in February.

The results over the next six months showed manufacturers' pessimism amid uncertainties created by tariffs, TIER said.

Commenting on the service sector, TIER said volatility on the local equity market made the securities industry very cautious as many investors fear Taiwan will face retaliation from the United States given its large trade surplus with Washington. In 2024, Taiwan's trade surplus with the U.S. hit US$73.9 billion.

On April 2, Trump announced "reciprocal" tariffs on countries that have a large trade surplus with Washington, including Taiwan, which was slapped with a 32 percent tariff. The White House announced a 90-day pause on the new measures later, with a 10 percent duty applied to all countries except China.

Meanwhile, Liu Pei-chen (劉佩真), a researcher at TIER's Taiwan Industry Economics Database, said the local home market has been in the doldrums, with heavy losses in the stock market, geopolitical tensions and uncertainties in the economy adding downward pressure to the real estate market.

Transactions of homes are expected to shrink and in certain areas where supply is high and home prices could face downward pressure, although prices in most of Taiwan are unlikely to move lower sharply due to high land costs, carbon fee charges and a labor shortage, Liu said.