(CNA, Taipei, Dec. 28) — As 2024 draws to a close and a new year approaches, opportunities abound, but so do variables. Domestic think tanks and scholars unanimously agree that the greatest challenge in 2025 will be "uncertainty," with U.S. President-elect Donald Trump and Artificial Intelligence (AI) serving as the key keywords determining the economic outlook for the coming year.

Major domestic think tanks have recently released economic forecasts. Following a high economic growth rate of 4.27% this year, next year is expected to maintain a level between 3.03% and 3.29%. However, experts agree that predicting the 2025 growth rate is highly difficult due to numerous variables and an economic landscape that is not entirely within Taiwan's control.

"In the past month, I have had many opportunities to exchange views with foreign representatives and the academic community. The consensus is that next year will be defined by 'uncertainty,'" stated Peng Shin-kun, Vice President of Academia Sinica. With Trump set to take office within a month, his unpredictable style makes forecasting next year's economic trends a significant challenge.

Lin Chang-ching, a joint researcher at the Institute of Economics, Academia Sinica, analyzed that the most critical variables for next year are the direction of monetary and trade policies after Trump takes office. Trump emphasizes "America First" and advocates unilateralism. Economically, he is expected to cut taxes domestically while increasing tariffs externally. However, the global concern is whether tariffs will trigger retaliatory measures from other countries, worsening the international trade environment and slowing global economic growth.

Lin Chien-fu, Chief Economist at CTBC Financial Holding, estimated the sequence and impact of the Trump administration's policies. He believes that after Trump's inauguration on January 20, 2025, the U.S. may immediately withdraw from the Paris Agreement and expand support for Israel.

In the first half of 2025, Lin believes Trump will implement immigration and tariff policies, including large-scale deportations of illegal immigrants and imposing tariffs on countries like China. If other nations retaliate, a trade war could erupt. By the second half of the year, the U.S. Congress is expected to pass Trump's tax cut policies, which would help support the U.S. economy.

It is worth noting that although Trump has not yet taken office, President Biden announced a "Section 301 investigation" into Chinese-manufactured legacy semiconductor chips on the 23rd. The process will take months, meaning the decision on whether to impose higher tariffs on Chinese chips will ultimately fall to Trump.

Liu Pei-chen, Director of the Industrial Economics Database at the Taiwan Institute of Economic Research (TIER), analyzed that previous U.S. suppression focused on advanced processes and high-end chips. The shift to legacy processes is likely because China, facing roadblocks in advanced development, has pivoted resources to third-generation semiconductors and legacy processes. It is foreseeable that as Chinese fabs expand, future capacity will increase significantly, leading to an oversupply of mature semiconductor processes globally and triggering a price war.

Liu believes the U.S. use of Section 301 at this stage aims to use tariffs to block a flood of Chinese legacy chips from entering the U.S. market.

From this perspective, it might seem beneficial to Taiwan due to order transfer effects and relief from China's price war. However, Liu warned that the long-term attitude of other nations is key. Major European chipmakers like Infineon, NXP, and STMicroelectronics continue to invest in China or collaborate with local players. Europe's stance on China is not as hardline as the U.S., making "Europe's future attitude something we must observe closely."

Aside from Trump, the other major economic keyword for 2025 is AI. According to a survey by the Chung-Hua Institution for Economic Research (CIER) in the second half of 2024, 28.7% of manufacturers reported they have "already participated" in the AI supply chain or are "planning and preparing" to develop AI products. CIER President Lien Hsien-ming believes that with manufacturers actively seizing industry trends and sustained AI momentum, next year will be one of both opportunities and risks.

TIER President Chang Chien-yi also pointed out that AI will remain mainstream in 2025. This year's AI boom was concentrated in B2B and server-related sectors, leaving traditional industries struggling. If AI benefits spread to B2C next year, traditional industries could benefit simultaneously. While AI servers have fewer links to traditional industries, applications extending to AI PCs and AI smartphones would help drive traditional sectors.

Lin Chang-ching offered an alternative perspective regarding U.S.-Taiwan relations. He noted that Trump's demand for Taiwan to raise defense spending to 10% of GDP is extremely difficult. He suggested considering other modes of cooperation. Beyond importing raw materials and increasing military purchases from the U.S., given the sustained global demand for AI supply chain chips, the extent to which Taiwan's electronic supply chain moves to the U.S. is an area worth considering and observing.

Looking ahead to 2025, while major domestic think tanks emphasize significant variables, Taiwan's economic outlook remains optimistic based on current conditions. The Institute of Economics at Academia Sinica described the situation with the phrase "Riding the Snake to Create Opportunity" (a play on the upcoming Year of the Snake). Supported by sustained demand for emerging technology applications and active expansion of investment by manufacturers, as long as Taiwan can respond nimbly, it can turn risks into opportunities and maintain economic growth momentum.

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