10:33 AM EDT, 04/10/2025 (MT Newswires) -- After a Lunar New Year effect skewed February's trade growth numbers in Taiwan, a moderation of year-on-year growth in March was inevitable, said ING.

However, export and import growth both ended up beating expectations on Thursday, wrote the bank in a note. Exports grew by 18.6% year over year and imports grew by 28.8% year over year, though in net this resulted in a smaller than forecasted USD6.95 billion trade surplus on the month.

By export product, Taiwan's key exports of semiconductors (20.6%), computers (40.1%), and computer parts (50.9%) all saw robust growth, while other export categories were generally on the weak side.

By export destination, the country with the highest export growth for the month was South Korea (44.4%), with the United States (39.9%) just slightly behind. Exports to ASEAN (15.8%) and Mainland China and Hong Kong (12.6%) also showed solid growth. On the weaker end, export growth to the European Union was flat, and exports to Japan contracted at a 4.0% year-over-year pace.

Imports once again significantly overshot market forecasts, but a closer look reveals that this was almost entirely concentrated in the tech sector as well -- semiconductor equipment imports surged 189.8% year over year and integrated circuit and related raw material imports rose 50.4% year over year, pointed out ING.

With many of the non-tech related export and import growth in negative year-over-year territory, Taiwan's trade is quite heavily concentrated and faces potential headwinds if U.S. tariffs and export controls come into effect, stated the bank.

A few weeks back, ING thought that Taiwan could avoid the worst of the U.S. reciprocal tariffs due to its cooperative attitude, the nature of Taiwan's key exports and the high-profile US$100 billion investment commitment from TSMC into U.S. manufacturing facilities.

However, it turns out that the bank "severely overestimated" the amount of fine-tuning and thought that went into the reciprocal tariff decision, and Taiwan was hit with a 32% reciprocal tariff hike, though the semiconductor exports were indeed exempted.

ING added that its reasoning still held true -- to date, TSMC's investment commitment is probably still the most high-profile case of announced investment into U.S. manufacturing recently. Semiconductors were already exempted, and given the popularity of many of Taiwan's consumer electronics, such as laptops, as well as the relatively small likelihood that U.S. competitors would be able to fully absorb this market, it's possible that some computer products could end up being exempted as well.

Taiwan's economy is one of the most vulnerable in Asia to U.S. trade, only slightly behind Vietnam in its exposure to the U.S. market, noted the bank. As such, it was no surprise that Taiwan announced it wouldn't be retaliating against U.S. reciprocal tariffs even before the delay.

The 90-day U.S. tariffs reprieve window announced Wednesday will be important for Taiwan to secure either a tariff reduction or waiver -- failure to do so represents a notable risk to Taiwan's trade and growth outlook in the second half, according to ING.