TAIPEI (Taiwan News) — Taiwan Ratings Corp. warned Monday that global trade policies and tensions could squeeze growth in the second half of this year.

In its mid-year report, Taiwan Ratings explained that despite Taiwan’s GDP expanding 5.4% year-on-year in Q1, it cautioned that growth could slow in the months ahead as US trade measures and responses from other economies ripple through the supply chain, per CNA.

Taiwan Ratings credit analyst Lin Hsien-ching (林顯勍) said while semiconductor exports performed strongly early this year, tariff uncertainties may constrain expansion over the next few quarters, per MoneyDJ. Other pressures include China’s economic sluggishness and geopolitical instability, which could dampen trade flows and consumer confidence.

Taiwan Ratings identified several factors including shifting trade patterns from tariffs, tighter capital markets limiting corporate financing, and rapid foreign exchange fluctuations hitting unhedged positions.

The agency further warned that Taiwan’s high-tech industries could face disruptions from fast-evolving technology and mounting cybersecurity threats. It urged businesses to monitor risks and strengthen resilience measures.

The Directorate-General of Budget, Accounting, and Statistics in May revised Taiwan’s GDP growth this year to 3.1%, citing rising protectionism and trade uncertainty.