Taiwan Machinery Industry Faces Challenges and Opportunities Amid U.S. Policy Shifts

The Taiwan Association of Machinery Industry (TAMI) predicts a gradual recovery in machinery export orders, supported by a warming U.S. market. However, the second-term policies of U.S. President-elect Donald Trump introduce new uncertainties, such as high tariffs and a preference for U.S.-based manufacturing. These developments pose challenges for Taiwan's exports, necessitating ongoing observation of their impact. To mitigate risks, TAMI urges the industry to proactively diversify its market strategies.

According to the Taiwan Machine Tool & Accessory Builders’ Association (TMBA) and analysis from the Industrial Economics & Knowledge Center (IEK) at the Industrial Technology Research Institute (ITRI), the impending implementation of Trump’s policies may reignite tariff hikes and trade tensions. While higher tariffs could erode Taiwan’s export competitiveness in the U.S., the concurrent reshoring of manufacturing to the U.S. presents potential collaboration opportunities for Taiwan’s machine tool and machinery industries.

In November, Taiwan's machinery exports reached US$2.451 billion, a 2.6% increase from October but a 1.4% decline compared to the same month in 2023. In NT dollars, November exports were valued at NT$78.839 billion, reflecting a 1.6% year-over-year decrease. Cumulatively, the first 11 months of 2024 saw machinery exports totaling US$26.659 billion, a 0.6% dip from the same period last year. However, in NT dollar terms, the value rose by 2.3%. TAMI, referencing Ministry of Economic Affairs (MOEA) data, noted four consecutive months of positive growth in foreign sales orders, signaling a slow but steady recovery for Taiwan’s machinery sector.

Focusing on the machine tool industry, TMBA reported November exports at approximately US$194 million, reflecting a 5.6% monthly increase but a 6.9% annual decline. For the year to November, machine tool exports totaled US$2.003 billion, down 16.2% year-over-year. Despite the contraction, the pace of decline has moderated. TAMI highlights that Taiwan’s machine tool recovery remains slower than other machinery segments, but the U.S. market shows promise, with two consecutive months of positive export growth.

Looking ahead, Taiwan’s machine tool exports may benefit from a warming U.S. manufacturing sector, though exchange rate fluctuations—such as recent depreciation of the Japanese yen and South Korean won—could impact the global competitiveness of Taiwanese manufacturers.