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Heightened geopolitical uncertainty prompts downward revisions to global growth projections
Cautious domestic sentiment, with banking and insurance sectors remaining upbeat |
Following the U.S.-Iran ceasefire agreement, regional tensions remain elevated, and traffic through the Strait of Hormuz continues to be volatile. While export and manufacturing activity in most economies has thus far maintained an expansionary trajectory, the prospect of renewed negotiations and a substantive accord between Washington and Tehran remains highly uncertain. Prolonged disruption to Strait passage would materially amplify uncertainty in energy supply. International institutions have broadly revised down their global growth forecasts and simultaneously raised inflation projections. On balance, the economic outlook remains highly contingent on whether the Middle East conflict can be effectively de-escalated, given the dual pressures of slowing growth and rising inflation confronting the global economy.
On the domestic front, robust AI demand has driven rising requirements across related supply chains, while higher international commodity prices have strengthened restocking incentives. Manufacturing exports, output, and foreign orders registered notable gains in March, lifting the share of firms reporting favorable business conditions for the month. However, as the U.S.-Iran conflict persists and global economic uncertainty intensifies, firms have adopted a more cautious outlook for business conditions over the next six months. In the services sector, financial market volatility has increased amid the ongoing conflict; nonetheless, the banking industry has benefited from steady expansion in deposit and lending operations ...Read more |
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| The U.S. Tariff Ruling Highlights the Need for Greater Statutory Flexibility in Tariff Regulation |
| President Trump invoked the International Emergency Economic Powers Act (IEEPA) of 1977 to impose tariffs; however, the U.S. Supreme Court ruled that the statute does not grant the President authority to levy tariffs, rendering such measures legally invalid. From the standpoint of economic principles and contemporary international economic relations, tariff legislation warrants more clearly defined flexibility to prevent unnecessary disputes and systemic inefficiency. Historically, tariffs served primarily as unilateral instruments for revenue generation or domestic industry protection. Yet as trade liberalization has produced considerable structural side effects, as certain countries have pursued self-interested policies through unfair trade practices, and as international industrial cooperation and competition have grown increasingly intricate, the strategic importance of tariffs has risen markedly. The Supreme Court's ruling adhered strictly to statutory interpretation, yet from an economic standpoint, it reveals a degree of inflexibility. It is inherently inconsistent to permit the President to impose outright import prohibitions—a far more severe measure—while disallowing comparatively moderate tariff rates. Furthermore, precisely quantifying the distributional incidence of tariffs is inherently difficult. Tariff burdens are not borne solely by importers; they are passed downstream to wholesalers, distributors, retailers, and ultimately consumers, with each party's share being difficult to calculate. How to administer equitable tariff refunds remains equally contentious. Given the rapid pace of economic change, tariffs have become a critical instrument in international negotiations, requiring timely responsiveness to counterpart nations' reactions and reciprocal commitments. Demanding detailed congressional approval for each adjustment would impede negotiations and undermine broader strategic objectives. Governments should therefore grant the executive branch greater discretionary authority over tariff decisions, allowing dynamic adjustments within legislatively prescribed bounds. Delegating all tariff determinations to the legislature would be no more efficient than requiring parliament to designate every traffic signal location. While legislative oversight remains foundational, a broad range of administrative matters must be left to the executive branch to manage with the requisite agility. |
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Taiwan Economic Research Monthly
The Dawn of the AI Era: Structural Adjustment Directions for Taiwanese Enterprises |
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As AI permeates business operations and daily life, it has evolved from a supplementary tool into a force reshaping R&D, production, governance, talent development, and investment strategy. For Taiwanese enterprises, the challenge is no longer whether to adopt AI, but whether they can transform their operating models, decision-making processes, and organizational structures accordingly. This month's feature explores seven dimensions. First, AI competition is shifting from technology to governance capabilities; without data governance and risk management, advanced technologies cannot sustain productivity. Second, rising computing demands require R&D to shift toward cross-disciplinary, system-level co-design, leveraging policy resources to capture opportunities in frontier technologies such as silicon photonics. Third, manufacturers must transition toward "software-defined manufacturing," integrating software, data, and platforms to sustain advantage. AI transformation also concerns market access. As global AI regulations take shape, compliance becomes a core competitive capability, particularly for Taiwan's export-oriented enterprises. Talent development must become a long-term strategic priority across technical, application, and governance roles. As AI agents enter enterprise environments, workflows and management structures will require redesign. Enterprises should also pursue external innovation through corporate venture capital, R&D partnerships, and startup development. Ultimately, competitiveness in the AI era depends not on possessing new tools, but on completing structural adjustments that transform AI into sustainable, scalable operational profitability.
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