TAIPEI (Taiwan News) — National Development Council Deputy Minister Kao Shien-quey (高仙桂) said Wednesday that Taiwan’s manufacturing output could drop by 5% due to US President’s Donald Trump’s tariffs.

Kao speaking at a Third Wednesday Club meeting said the tariff hike could make Taiwan’s industrial exports to the US fall by 26%, per CNA. The higher costs would likely prompt some manufacturers to relocate production to countries like Mexico, affecting Taiwan’s production capacity and domestic employment.

She explained that around 70% of Taiwan’s exports to the US are electronics and IT products, with half that figure being high-demand items such as graphics cards, servers, and semiconductors.

These products are sourced almost exclusively from Taiwan, Kao added. She warned that without a favorable trade arrangement, firms could be forced to shift production overseas.

Based on estimates from the Directorate-General of Budget, Accounting, and Statistics, Kao noted the tariffs could lower GDP growth by 0.5 to 1.5 percentage points. She said the full impact would depend on whether the US eases its stance and how global production patterns shift, particularly in response to Chinese trade dynamics.

Scheduled to take effect on April 9, the 32% tariffs have been postponed by 90 days, per BBC. Kao said the halt has triggered a short-term export surge, but uncertainty will weigh on long-term demand.