Taipei: Taiwan will continue to face uncertainties caused by United States tariff policies, the central bank said recently, but that did not stop it from raising its forecast for Taiwan's 2025 gross domestic product (GDP) growth.

According to Focus Taiwan, in a report released after a quarterly policymaking meeting, the central bank highlighted potential tariffs on semiconductors and other tech products under Section 232 of the U.S. Trade Expansion Act as factors that could impact Taiwan's tech sector adversely. The investigation launched by Washington in April aims to assess the effects of semiconductor imports on national security, which may result in import duties.

The central bank expressed concerns that if the U.S. imposes import duties on semiconductors and other tech gadgets, it would affect global supply chains, increase electronic product prices, and eventually squeeze Taiwan's exports. This would be detrimental to Taiwan, given the electronics sector's key role in the country's economic growth. In the first eight months of 2025, electronic components and information and communications/audio and video industries accounted for 42.2 percent of Taiwan's total exports of US$398.43 billion.

At its latest policymaking meeting, the central bank raised its GDP growth projection for 2025 to 4.55 percent, up from the previous estimate of 3.05 percent made in June. The revision was attributed to an unexpectedly strong export performance driven by booming demand for artificial intelligence applications. The central bank also forecast a GDP growth of 2.68 percent for 2026.

The report further noted that while the White House has reached framework agreements on tariffs with its trading partners, companies remain hesitant to invest due to a lack of detailed agreements, which is causing a drag on the global economy. Uncertainty also looms as major world economies are divided on adjusting their monetary policies, which impact global financial markets.

Despite the U.S. Federal Reserve cutting its key interest rates by 25 basis points, Taiwan's central bank left interest rates unchanged for the sixth consecutive quarter. Meanwhile, the People's Bank of China eased liquidity to boost its economy, whereas the European Central Bank held off on a rate cut, pending further assessment of inflation and economic data.

The central bank also pointed out that weakening domestic demand in China has led to an increase in exports to mitigate a domestic supply glut, intensifying global market competition and affecting Taiwan's exports. At a news conference, Central Bank Governor Yang Chin-long emphasized that a rate cut is not a panacea for economic issues. He acknowledged that while the high-tech sector benefits from strong AI-driven exports, non-high-tech industries remain vulnerable to the impacts of U.S. tariffs and China's product dumping in the global market.