TAIPEI (Taiwan News) — Business sentiment dropped across Taiwan’s major industries in April, but early-year momentum and easing tariff fears may cushion the blow, Taiwan Institute of Economic Research said Monday.

TIER President Chang Chien-yi (張建一) said that front-loaded orders spurred by tariff threats and the gradual thaw in government spending could lift the economy, especially if the NT$410 billion (US$13.69 billion) special budget passes with bipartisan support, per UDN. He said he expects GDP growth to reach 3% this year and estimates the final tariff rate from US talks may settle around 15%.

TIER’s April index readings were 90.90 for manufacturing, 85.41 for services, and 90.38 for construction, per a press release. Manufacturing fell for a third straight month, while services and construction posted a fourth consecutive decline.

Chang explained that Taiwan’s economy performed strongly in the first half, and while the second half may see some softening, the momentum should carry through, per CNA. He attributed the uncertainty to US President Donald Trump’s shifting policies, cautioning that tariff terms could be abruptly revised if fiscal pressures mount.

He also flagged risks from a US Section 232 probe into ICT and semiconductors. While the Cabinet and TSMC have submitted formal responses, the outcome remains uncertain.

Chang warned of the so-called “reservoir effect” – where steep semiconductor tariffs could force TSMC to pass costs to clients, triggering shockwaves across the downstream supply chain. “No one wants to see the entire semiconductor ecosystem destabilized,” he said.

Still, Chang struck a reassuring tone, calling April’s declines “already behind us.” He cited Trump’s recent delay in the planned EU tariffs – from June 1 to July 9 – as evidence that earlier panic may have been premature.