TAIPEI (Taiwan News) — Taiwan Institute of Economic Research said Wednesday the country’s December manufacturing indicator increased by 2.77 points to 14.87 points, recovering from November’s sluggish “yellow-blue” to stable “green.”

TIER explained the change in December was due to strong demand for AI and high-performance computing, per CNA. This led to an increase of more than 20% in export orders and production indices, along with an import surge of over 30%, raising the indicator’s overall score.

The electronics components sector benefited from this demand, boosting production in 12-inch wafer foundries, IC packaging and testing, and motherboards. In the chemical products industry, excess overseas production led to low-price competition and reduced petrochemical orders.

However, electronic chemical materials orders grew, and the demand for cleaning products increased due to seasonal flu and measles.

Despite the shift to green, TIER warned of uncertainties ahead. US President Donald Trump imposed a 10% tariff on China but suspended his 25% tariffs on Canada and Mexico on Monday. He has also signaled plans to impose new tariffs on the EU, per BBC.

The escalating trade war and retaliatory measures could heighten global economic risks, the institute cautioned.

Furthermore, TIER said it believes that Washington may use higher tariffs to speed up trade negotiations with countries and reduce trade deficits. However, US businesses are likely to pass on increased import costs to consumers, potentially stoking inflation.