Trump Puts Taiwan On The Tightrope – Analysis

By Haruka Satake

Donald Trump’s 2024 US presidential election victory marks the beginning of a critical phase for Taiwan. As US–China tensions continue to escalate, Taiwan’s strategic importance is more pronounced than ever. With Trump’s foreign policy approach largely transactional and focused on financial leverage, Taiwan will need to navigate a shifting dynamic that could reshape its relationship with both the United States and China.

Despite already spending around 2.5 per cent of its GDP on defence — comparable to NATO members like the United Kingdom at 2.5 per cent and France at approximately 2 per cent — Trump has criticised Taiwan’s defence spending as insufficient given the growing threat from China. During his first term, Trump pushed Taipei to strengthen its defence capabilities and expanded arms sales to Taiwan, including advanced fighter jets and missile systems. In 2021 alone, the United States approved a US$750 million arms sale to Taiwan, signalling continued defence support.

A second Trump presidency could bring greater pressure on Taiwan to increase defence spending or purchase even more advanced military systems from the United States. Trump’s transactional approach would likely mean that Taiwan’s support and willingness to invest more in its defence will be critical to maintaining strong US–Taiwan relations. 

Taiwan’s multibillion dollar purchase of US arms can be seen as a strategic partnership as well as a financial transaction that benefits the US defence industry. Trump’s accusations of the Taiwanese semiconductor industry ‘stealing’ US jobs and his calls for Taipei to further hike military spending suggests that US support may come at a higher price this time.

Some analysts remain positive, arguing that Taiwan could align with Trump’s transactional worldview by using its financial capabilities to increase US diplomatic support. But others have warned that Trump’s election signals a dangerous future for Taiwan, including concerns that Trump’s dismissive remarks about Taiwan may reflect his true stance. Plus, key US officials who supported Taiwan have left Trump’s administration. These warnings underscore the increasing uncertainty surrounding Taiwan’s position under a second Trump presidency.

Proactive measures are crucial to navigating these challenges. Taiwan must prepare for potential shifts in Trump’s policies, which could significantly impact industries across the region. Companies should anticipate scenarios where tariffs rise by up to 10 per cent and estimate the corresponding costs to their operations. 

Given these measures will likely be shaped through negotiations with trade partners, it is essential for industries to develop flexible contingency plans to mitigate potential disruptions effectively. Taiwan could also prioritise relationships with key pro-Taiwan figures within the Trump administration, such as incoming secretary of state Marco Rubio and national security advisor Michael Waltz, who have supported Taiwan’s interests and could play a crucial role in shaping US policy towards Taiwan.

Trump’s economic policies, particularly his stance towards China, will also play a pivotal role in shaping future US–Taiwan relations. After Trump’s victory, the Taiwanese government expressed its desire for the United States to continue its current policy of deterring China while maintaining friendly relations with Taiwan. But if Trump reduces US trade dependence on China through tariffs, the United States could increase pressure on Taiwan to counter China militarily and economically. If this were to happen, Taiwan would be forced to strengthen its economic ties with the United States and lessen its dependence on China. 

Taiwan’s central bank warned such a change in US economic policy may directly impact the momentum of Taiwan’s export growth and deter domestic investment, which could have a negative impact on economic growth. Taiwan’s dominance in the semiconductor industry could also be a source of friction with Trump. Taiwan should carefully navigate this delicate balance between the United States and China and avoid a situation where it is forced to take sides economically or politically in a way that harms its long-term stability.

This economic unpredictability ties directly into Trump’s broader diplomatic approach, complicating other countries’ ability to anticipate his policy moves. While his confrontational stance on China — particularly regarding trade and security — has been clear, his overall strategy has been difficult to predict. Already navigating a complex geopolitical environment, Taiwan should prepare for potential volatility in US economic and diplomatic actions. 

The uncertainty surrounding Trump’s decision-making forces Taiwan to adapt continually to changing US policies in both economic and security spheres. Taiwan should push for policies that strengthen its economic resilience by diversifying trade relationships, reducing reliance on the United States and China and ensuring strong defence capabilities to counter potential threats. Doing so would help Taiwan better navigate US foreign policy volatility while maintaining its economic stability and sovereignty.

The second Trump administration will profoundly affect Taiwan and the region. Trump’s transactional foreign policy will likely demand increased financial contributions in military purchases, pressuring Taiwan to invest more in its own defence while supporting the US defence industry. Taiwan must navigate these pressures carefully, balancing economic stability with military deterrence within the complex US–China–Taiwan triangle.

• About the author: Haruka Satake is a Policy Research Fellow at the Edwin O Reischauer Center for East Asian Studies at the Johns Hopkins School of Advanced International Studies, Washington, DC.
• Source: This article was published by East Asia Forum