Growing like ‘gangbusters’: Can Taiwan maintain its economic momentum?
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- Taiwan's GDP jumped 12.92% in Q2 2025, following a 13.69% Q1 rise and 8.63% full-year growth, fueled by soaring AI-related tech exports to the United States.
- US imports from Taiwan reached $201bn in 2025 — nearly double the $116bn posted in 2024 — and in May Taiwan overtook China to become America's third-largest source of imports.
- Taiwan manufactures roughly 90% of the world's advanced AI chips, according to the Atlantic Council's Dexter Tiff Roberts, who expects the demand surge to be 'long term.'
- The Trump-Taiwan agreement commits Taiwan to $500bn of investment in the US, permits Taiwanese firms to import 2.5 times the capacity of their American factories tariff-free, and cuts Taiwan's tariffs on 99% of US goods.
- TSMC accounts for up to 40% of Taiwan's stock market and 4% of its GDP growth — a concentration the University of Alberta's Reza Hasmath called 'unsustainable,' noting the chip industry employs at most 350,000 people.
- Taiwan's roughly $200bn trade surplus with the US could provoke a Trump-led renegotiation, with Hasmath describing the bilateral relationship as 'unbalanced' and 'not conducive to Taiwan in the long term.'
- China's government has publicly warned that Taiwan's deepening integration with the US tech sector will 'drain Taiwan's economic interests' and 'hollow out' the island's core industry.
Why it matters: Taiwan's headline GDP surge masks a dangerously narrow foundation: TSMC alone drives 40% of the stock market while the chip sector employs just 350,000 workers, leaving most of the population outside the boom. A $200bn US trade surplus gives Trump a ready lever to reopen the $500bn semiconductor deal, and Beijing's stated opposition frames AI-fueled growth as a geopolitical liability rather than a clean economic win.
