TAIPEI (TVBS News) — Taiwan's manufacturing sector plunged deeper into recession Thursday (July 31), marking the second consecutive month of decline. The Taiwan Institute of Economic Research (TIER, 台經院) released its June business climate indicator, revealing growing anxiety among manufacturers. Stalled Taiwan-U.S. tariff negotiations and an ongoing Section 232 trade investigation threaten to reshape the island's export-dependent economy.
Global manufacturing recovery stumbles despite surging demand for artificial intelligence, high-performance computing, and cloud services across international markets. Traditional industries buckle under mounting pressure from trade protectionism, the strengthening New Taiwan dollar, and fierce low-cost competition from overseas manufacturers. The June indicator score edged up to 9.41 from May's reading, but the sector's downturn persisted across key manufacturing categories.
Taiwan's computer, electronic, and optical products sectors experienced sharp economic deceleration as the New Taiwan dollar's strength eroded export competitiveness. Export growth momentum slowed dramatically across these technology-focused industries that form the backbone of Taiwan's economy. TIER researchers emphasized that outcomes from Taiwan-U.S. tariff negotiations and the Section 232 investigation will determine the manufacturing sector's future trajectory.
Middle Eastern tensions have subsided while U.S. technology stocks surged, lifting Taiwan's stock market and brightening business environment indicators across the island. Trade uncertainty surrounding potential U.S. tariff measures continues casting shadows over Taiwan's economic performance despite these positive developments. TIER warned that escalating U.S. tariffs on Chinese imports could force Beijing to flood third markets with low-priced goods, intensifying competition for Taiwanese manufacturers. ◼