Taiwan sets $12.6 billion budget to fight economic fallout from US tariffs

On April 24, 2025, Taiwan's Cabinet approved a special budget of NT$410 billion (approximately US$12.6 billion) aimed at strengthening national security and bolstering economic resilience against the impact of U.S. tariffs.

The new budget proposal includes an additional NT$5 billion on top of the NT$88 billion package approved earlier this month to help local businesses cope with the effects of U.S. tariffs on industrial and agricultural sectors, as well as to stimulate the economy, Caliber.Az reports via Taiwanese media. 

A significant portion, about NT$100 billion, will be allocated to Taiwan Power Co. (Taipower). Premier Cho Jung-tai explained in a press conference that this funding would assist the state-owned utility company after legislators failed to approve a NT$100 billion capital injection plan. Taipower, which has accumulated losses of NT$420 billion as of the end of 2024, faces increasing pressure to raise electricity rates.

This new funding is designed to stabilise consumer prices in Taiwan and protect industries and the broader economy from potential global economic shocks, Cho added.

Additionally, around NT$150 billion of the special budget will go toward enhancing Taiwan's national security. This includes strengthening coast guard operations, developing unmanned aerial vehicle infrastructure, and upgrading information and communication systems and facilities, according to Cabinet spokeswoman Michelle Lee.

The Cabinet also earmarked approximately NT$167 billion for social safety net programs. To fund this special budget, the government plans to use its fiscal surplus. With NT$358.9 billion in fiscal surplus accumulated over the past eight years, Taiwan does not plan to incur new debt, Cho stated. However, the proposed bill allows for borrowing if necessary.

This budget, set to be allocated over the next 33 months through the end of 2027, is still subject to approval by the legislature. If approved, it would help push Taiwan's GDP growth to 2.9 per cent or higher in 2025, according to estimates from the International Monetary Fund (IMF). Despite a 90-day pause on U.S. tariffs, the Taiwanese economy remains at risk, with multiple think tanks revising their growth forecasts down by up to 1.5 percentage points due to the U.S.'s 32 per cent "reciprocal" tariffs on Taiwanese imports.

By Tamilla Hasanova