MIC: USA Trade War to Impact Taiwan’s Annual Growth in 2019

The Market Intelligence & Consulting Institute (MIC) stated that the trade war between the United States and China has already become a protracted conflict, and amid the influence of factors of uncertainty, the economic inertia will slow down for Taiwan’s major trading partners, including the USA, the EU, Japan, South Korea, and Hong Kong. This will be a drag on the global economy and will impact Taiwan’s annual growth next year.

Senior industry consultant Chen Zi-ang pointed out that from the results of international forecasting agency observations, the estimated values for Taiwan’s economic growth next year will be worse than those of 2018. Furthermore, an early response will be required in case Taiwan’s economic growth rate is faced with a gross margin crisis. Regarding China’s and the United States’ 90 days of recess in entering into negotiations, it still remains to be seen whether or not the deal will break down and the US restores 25% tariff measures, which will inevitably affect Taiwan's ICT industry.

Institute for Information Industry (III) MRC estimates that the most probable development situation will be a protracted war and that the conflicts will not be solved in the short term. Although not every country will be directly impacted, overall international trade activity may slow down as a result, and there will be additional factors of uncertainty.

Institute for Information Industry (III) MRC observed that the most recent situation in the trade war between the United States and China is impacting a portion of Taiwan’s telecommunications industry with one Taiwanese manufacturer after another beginning to adopt countermeasures. Some items of semiconductors, information products, and the netcon industry have also been affected, including logic in semiconductors, analog, and memory wafer semi-finished products and modules. Meanwhile, information products such as motherboards, desktop computers, and computer peripherals have been impacted along with broadband terminals and switch and set-top boxes in the communications industry.

Two types of response measures are generally being adopted by the most influential information product related enterprises. The first is to transfer their production locations, and Vietnam, Mexico, the Philippines, and even Taiwan are options which businesses are evaluating. The other response is to adjust pricing, and currently some brands have raised prices by 5% to 10%.