Taiwan’s 2025 economy surged 7.4% on tech exports, but tariffs and a strong currency hurt traditional industries.

Taiwan's economy expanded 7.4% in 2025—the fastest in 15 years—thanks to robust exports of semiconductors and AI hardware, particularly from TSMC. However, U.S. tariffs (originally 20%, later lowered to 15%) and a strong Taiwan dollar caused significant declines for traditional manufacturers in machinery, metals, and chemicals. Businesses like Litz Hitech Corp. reported export declines of up to 30%, which resulted in fewer hours worked and unpaid time off for employees. Uncertainty surrounds the legal foundation of tariffs, and a potential Supreme Court decision could undo a U.S. trade agreement that calls for $500 billion in investments. Experts advise traditional businesses to embrace AI and provide integrated services due to the long-term risks associated with an excessive reliance on technology. Despite anticipated rate cuts in the United States, currency stability is still a concern.