In the first year of his second term, US President Donald Trump continued to shake the foundations of the liberal international order to realize his “America first” policy.
However, amid an atmosphere of uncertainty and unpredictability, the Trump administration brought some clarity to its policy toward Taiwan.
As expected, bilateral trade emerged as a major priority for the new Trump administration. To secure a favorable trade deal with Taiwan, it adopted a two-pronged strategy:
First, Trump accused Taiwan of “stealing” chip business from the US, indicating that if Taipei did not address Washington’s concerns in this strategic sector, it could revisit its Taiwan policy.
Second, it hinted at what might happen if Taiwan-US ties changed by highlighting the massive victory for American workers, including farmers, and families, that emerged after the meeting between Trump and Chinese President Xi Jinping (習近平) in Busan, South Korea, in October last year.
Trump’s pressure politics prompted President William Lai’s (賴清德) administration to take measures to maintain the relationship. Taiwan did not impose any retaliatory tariffs on US goods and the process of a mutually beneficial trade deal was accelerated.
The deal has huge significance for the US: It would enable the US to reduce its trade deficit with Taiwan, which stands at US$73.9 billion, while semiconductors are vital for the US’ industrial, technological and military strength.
Moreover, the US is dependent on foreign manufacturers and brittle global supply chains. The trade agreement would help it revitalize its semiconductor industry.
Another sphere in which there was a profound change is security ties. For years, Taiwan has been dependent solely on the US for its security, but Trump appeared uninterested in continuing the defense to Taiwan without a cost-sharing mechanism.
As part of the Trump administration’s security strategy, the US demanded that Taiwan increase its defense budget to 10 percent of GDP. In turn, Lai launched a new “Taiwan plus America” strategy to bolster security and defense ties. As part of the strategy, he announced that Taiwan would increase its defense spending to 5 percent of its GDP by 2030.
Taiwan also announced a US$40 billion special defense budget to buy US advanced missiles and sea drones.
The Trump administration has many reasons to feel pleased, because the change in Taiwan’s defense strategy would boost the US’ defense and military industry.
Taiwan’s enhanced defense capabilities will also help the US’ efforts to promote a free and open Indo-Pacific region.
Taiwan’s efforts to modernize its defense and become self-reliant would reduce the risk of direct conflict between the US and China if Beijing orders military action against Taiwan.
However, the shift in the US administration’s economic and security policies toward Taiwan does not mean that Washington views Taipei only through a transactionalist prism. Taiwan holds greater strategic importance to the US than ever before:
First, Taiwan’s independent identity is central to the US-led regional and global order in the sense that the annexation of Taiwan by China would bring an end to the US’ dominance in the region.
Second, Taiwan’s strategic location is also important to the US. Its location between China and two US allies — Japan and the Philippines — makes it a strategic asset for the US to deny China access to the open ocean.
Third, the Taiwan Strait is a major maritime trade route, with 44 percent of the world’s container fleet transiting through it. A Chinese takeover of Taiwan would put the route at Beijing’s mercy.
Fourth, while Taiwan is the 21st-largest economy in the world, bilateral trade with the US was US$158.6 billion in 2024, so Chinese control of Taiwan would not only boost the Chinese economy, but would also be an unprecedented economic loss for the US.
Fifth, Taiwan produces 90 percent of the world’s most advanced semiconductors, making it central to the global tech supply chain, so promoting peace in the Taiwan Strait is crucial for the US to ensure uninterrupted supply of semiconductors.
Sixth, the disappearance of Taiwan as a functioning democracy would be a major setback to Washington’s commitment to promoting democracy worldwide.
The structural calculations and other considerations were reflected in the appointment of several high-ranking officials in the Trump administration, including US Secretary of Defense Pete Hegseth, a strong supporter of Taiwan.
The US Congress passed several bills on Taiwan, including the Taiwan Allies International Protection and Enhancement Initiative Act, the Taiwan International Solidarity Act and the Taiwan Assurance Implementation Act. The US National Security Strategy and National Defense Strategy also accorded importance to peace and security in the Taiwan Strait. For example, the security strategy reiterated that the US would maintain its long-standing declaratory policy on Taiwan, meaning that the US does not support any unilateral change to the “status quo” in the Taiwan Strait.
Bipartisan support for Taiwan in the US was also a major factor in the Trump administration’s approval of the largest arms sale since 1979 of US$11.1 billion to Taiwan in December, but unlike his predecessor, former US president Joe Biden, who openly spoke about US intervention in the event of a Chinese military attack on Taiwan on many occasions, Trump elevated the traditional US policy of strategic ambiguity to a new level.
For example, the Taiwan issue did not come up during the talks between Trump and Xi, and The Trump administration canceled Lai’s planned stopover in New York for a visit to Central and South America in July last year.
In an interview with CBS’ 60 Minutes, when asked about defending Taiwan from China, Trump said: “You’ll find out if it happens,” leaving the suspense to hang over whether the US would intervene in a military conflict between Taiwan and China.
The first year of the second Trump administration was marked by a hybrid policy of transactionalism and strategic ambiguity toward Taiwan. At the same time, Taiwan attempted to balance protecting its “silicon shield” with fulfilling its commitment to the US through the new trade deal.
Sumit Kumar is a Ministry of Foreign Affairs visiting fellow at National Chengchi University and an assistant professor in Delhi University’s Department of Political Science.
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