Taiwan’s Manufacturing Purchasing Managers’ Index (PMI) declined to 47.9% in August 2025, marking the third consecutive month below the critical 50 expansion-contraction threshold and representing the fastest pace of contraction since April 2024. This sustained decline highlights the ongoing pressure on the manufacturing sector. Meanwhile, the Non-Manufacturing Index (NMI) registered 50.7%, maintaining its sixth consecutive month of expansion despite weakening momentum, while future outlook indicators have contracted for six straight months.
Hsien-Ming Lien, President of the Chung-Hua Institution for Economic Research (CIER), attributed the manufacturing sector’s weakness to the implementation of U.S. reciprocal tariffs in August and ongoing uncertainty surrounding Section 232 provisions. The lack of clarity has prompted widespread corporate caution, resulting in contractions across key indicators, including new orders, production, employment, and inventory levels. Delivery times remained the sole component showing expansion during the period. Raw material prices have climbed for eleven consecutive months, further elevating operational costs for manufacturers.
President Lien noted that companies are currently absorbing approximately 70% of tariff-related costs, although this burden will gradually shift to consumers over the next three to six months. Beginning in October, consumers are expected to bear between 60% and 70% of these additional costs, which will create upward pressure on retail prices. The Section 232 provisions encompass 60% to 70% of Taiwan’s total exports, and continued policy implementation could intensify industry fragmentation. Advanced manufacturing processes are anticipated to experience limited impact, while mature processes and traditional industries face considerably greater pressure. The convergence of external policy uncertainties and deferred domestic demand has created a synchronized drag on economic performance. Future economic trends will largely depend on the final implementation details of U.S. tariff policies, requiring continued monitoring as these measures take full effect.
Author: CIER Editorial Team
Date: September 2, 2025