TAIPEI (Taiwan News) — Credit rating agency Fitch estimated US President-elect Donald Trump’s tariff plan will harm Taiwan’s economic growth, though the impact will depend on additional factors.

Fitch’s bank ratings deputy general manager Huang Yan-ju (黃嬿如) on Tuesday told reporters at an industry outlook event that the main impacts of Trump’s tariffs will be felt in 2026, per CNA. Based on the assumption of a 10% blanket tariff on imports to the US, Huang said Taiwan’s GDP growth could be reduced by 0.5%.

Huang said this is a theoretical estimate that does not account for Taiwan’s monetary and other policy responses. She said the impacts will also depend on when the tariffs are imposed and any agreements reached between the US and Taiwan.  

Fitch deputy general manager Chen I-ju (陳怡如) added that Trump’s 10% tariff may not apply to all products. She said the effective tariff rate could be as low as 2%.

Fitch estimates Taiwan’s growth rate will fall 0.1% for the next two years to 2.6% in 2025 and 2.5% in 2026. She said this estimate does not include US tariff impacts.

Meanwhile, Huang said Fitch revised its growth estimate for this year upward from 4% to 4.3%. She also said interest rate cuts next year are expected to maintain Taiwan’s low unemployment rate which will support the banking sector.

Huang said the banking sector outlook for next year remains neutral. She said this is because as the US-China trade war intensified post-pandemic, Taiwan’s reserve bank has reduced its exposure to the Chinese market alongside Taiwanese businesses.

Huang said overseas lending will likely show double-digit growth next year due to an expected interest rate cut. She said this would ease downward pressure on banks’ net interest margins.

Huang said the US is also likely to cut its interest rate, which will reduce lending costs for banks with large US dollar deposits.