Hands duct-taped behind their backs, black hoods over their heads, the demonstrators lay in the street outside Russia’s de facto embassy in Taipei. Taiwanese and Ukrainians were side by side to mark the third anniversary of Moscow’s invasion of Ukraine. The solidarity was an expression of the fear that Putin’s invasion will embolden Xi Jinping, China’s president, in his pursuit of Taiwan. “We are also facing the threat of communist invasion,” Chen Po-yuan, a Taiwanese influencer who participated in the demonstration last month, said on his YouTube channel. Taiwanese people see a stark parallel between what is happening in Ukraine and the Damoclean sword dangled above their heads by China. Like Ukrainians, they live under constant threat from a neighbour that believes it has a right to their territory. They also rely on Western support to keep that threat at bay. Yet just days after the protest, Donald Trump publicly upended American foreign policy by engaging in a shouting match on live television with Ukrainian president Volodymyr Zelensky at the White House. He followed up by effectively shutting off Kyiv’s missile defences by ending US intelligence sharing. In Taiwan, a sense of unease has turned into panic. “That was a huge moment for Taiwan,” says David Sacks, who studies Asia at the Council on Foreign Relations (CFR).
Trump has ruled out security guarantees for Ukraine, halted military aid and is pushing Zelensky to give up Ukrainian mineral rights and accept a ceasefire at all costs. Above all, he has made it clear that none of America’s traditional allies can rely on its support. The implications for Taiwan are stark. The island is endlessly circled by Chinese warships and fighter jets, relying heavily on US support as a deterrent to Xi’s aggression. While Biden promised to put American troops on the ground if China invaded Taiwan, Trump has refused to commit to protecting the island, claimed Taiwan “stole” America’s chip industry and is threatening to introduce 25pc tariffs on semiconductors, the bedrock of the Taiwanese economy. “Trump represents isolationism, which means he could abandon Taiwan,” says Cheng-Wei Lai, a semiconductor engineer based in Hsinchu, a city south of Taipei.
Businesses and politicians on the island are scrambling to appease the US president. President Lai Ching-te has pledged to ramp up defence spending from 2.5pc to 3pc of Taiwan’s GDP and there is talk of a plan to massively increase its American energy imports. Last week, the Taiwanese Semiconductor Manufacturing Company (TSMC) pledged to invest $100bn (£77bn) to build up its manufacturing capabilities in the US – one of the biggest foreign investments in America’s history. The investment was well received by the president, but warm words are no guarantee of security. In fact, the investment may undermine the military relationship.
Taiwan is the crucible for the production of the world’s most advanced semiconductors and, as a result, a full-blown war on the island would threaten a global economic meltdown. This threat of mutually assured economic destruction has provided what analysts have dubbed a “silicon shield” – it is in the US’s interests to protect the island. If Trump gains capacity to make these chips in the US, he could lose all interest in protecting Taiwan – if he has any to begin with. The Taiwanese also worry that the US president may treat the island simply as a bargaining chip as he eyes up a deal with Xi. The 10pc tariffs that he has levied on China have enraged Beijing, but observers believe Trump is laying the groundwork for negotiations with the world’s second-largest economy. Everything has a price in Trump’s transactional world. In Taiwan there is a slogan: “Ukraine today, Taiwan tomorrow.”
Appeasing the president
Formerly a Japanese colony, Taiwan sits about 100 miles off the south-east coast of China and was part of the country until Mao Zedong’s communist revolution in 1949. The nationalist Kuomintang government that had ruled from Beijing fled to Taiwan, where they made Taipei their temporary capital and declared martial law. Today, the island, which officially calls itself the Republic of China in opposition to the People’s Republic across the strait, is home to 23m people. Martial law was lifted in Taiwan in 1987 and it held its first democratic elections in 1996. Beijing has claimed Taiwan is a province of China ever since the split in 1949, and Xi sees the rupture as a historical wrong he must right. He has called unification the “essence” of China’s “rejuvenation” and vowed to retake Taiwan by 2049, a century on from its independence. US officials say Xi has instructed his army to be ready to invade by 2027.
America’s historical support for the island stems from Cold War fears of communism spreading throughout Asia. While the US has no formal treaty obligations to protect Taiwan it identifies it as a key partner and supplies it with arms. Since 1950, the US has sold Taiwan around $50bn worth of weapons and defence equipment, according to the CFR. US naval ships sailed through the Taiwan Strait in February. “During Biden’s administration the discussions were value-based, about allyship, partnership or even democracy,” says Jason Chen, a former legislator in Taiwan and currently a senior fellow at Hudson Institute. “Trump has none of that. We need to be very clear on what we can offer and what do we want to get in return.”
Trump’s radical recasting of the situation in Ukraine offers worrying signs of what may be in store for Taiwan. “What worries people is this victim-blaming rhetoric,” says Brian Hioe, editor at New Bloom magazine, which covers activism and youth politics in Taiwan. “The idea of dealmaking, but also turning the pressure on Ukraine rather than Russia, the same way he could with Taiwan and China. “[Trump] needs the optics of submission, that’s what the exchange with Zelensky shows us. He needs to think that Taiwan comes out as a complete loser in this deal and the US is the only winner.” Chen adds: “You just have to understand it from the fundamental level that Trump is a dealmaker. He’s seeking to do deals.” What can the island offer? The US president wants to reduce reliance on Taiwanese chips, see more investment from the island and more American exports.
Trump has been particularly irked by trade deficits since returning to the White House and Taiwan sells far more to the US than it buys. Its trade surplus with America – the value by which what it sells outstrips what it buys – has ballooned from $11bn in 2018 to $65bn last year, according to Pantheon Macroeconomics.Not only does this risk provoking Trump’s anger, it also exposes Taiwan to tariffs. Kuo Jyh-huei, economics minister, in February said the government was working on countermeasures to protect Taiwan’s interests from Trump’s trade war An official told the Central News Agency that Taiwan was preparing to buy more American energy. State-owned energy company CPC is negotiating a deal with an Alaskan gas producer. TSMC’s investment announcement was timed neatly to give Trump a major win to parade during his first congressional address. “They’re smart in trying to preempt what happened to Ukraine or to other US allies,” says Sacks. “I think next we will see a major weapons purchase from Taiwan as well as potentially a major energy purchase to bring down the surplus that it has with the US.
“It is being very deliberate and very proactive. There’s a broader political strategy.” If Trump’s concerns are chiefly economic, then Taiwan can make a good case that it is in the US’s interests to protect the island. A Chinese invasion of Taiwan would trigger global meltdown. A full-blown war would wipe 10.2pc off global GDP in the first year through a combined toll from lost semiconductor production, the hit to global trade and a financial shock, according to analysis by Bloomberg Economics. The analysis suggests war in Taiwan would be twice as costly as the pandemic and the global financial crisis. A fifth of global maritime trade – some $2.45 trillion in goods – transited through the Taiwan Strait in 2022, according to the Centre for Strategic International Studies (CSIS). This included $586bn of goods handled in Taiwan’s ports.
Andy Hunder, president of the American Chamber of Commerce in Ukraine, who has been based in Kyiv throughout Russia’s war, visited Taipei last week to speak at a business workshop on resilience. “The focus was how does business continue to operate during circumstances like what Ukraine has seen over the last three years?” says Hunder. While Trump may be moved by economics, the Taiwanese worry about the human cost of war. The Pentagon has estimated a conflict would have a death toll of 500,000.
A pawn in Trump’s game
Some in the Maga movement seem unnervingly relaxed about these risks.
Vivek Ramaswamy, the Trump ally who briefly helped run Elon Musk’s Department of Government Efficiency, said during his own presidential run last year that he would be willing to effectively give up Taiwan once “we have achieved semiconductor independence”.
“After that, our commitments to Taiwan – our commitments to be willing to go to military conflict – will change because that’s rationally in our self-interest,” Ramaswamy said in August 2023. “That is honest. That is true, and that is credible.”
Trump’s exact positioning on Taiwan is still murky. Asked at the end of February if he would ever allow China to take control of the island by force, the US president said: “I never comment on that. I don’t want to ever put myself in that position.”
At face value, the contrast with Biden’s rhetoric was stark. In September 2022, asked if US forces would defend Taiwan, the former US president said: “Yes, if in fact, there was an unprecedented attack.”
However, George Yin, senior fellow at the National Taiwan University’s Centre for China Studies, says: “Trump is merely returning to an earlier position of strategic ambiguity, which was the dominant approach to Taiwan in the past.”
When President Richard Nixon launched diplomatic ties with China, visiting the mainland in 1972, he adopted what became America’s “One China” policy – a US acknowledgement of China’s claim and agreement that the Chinese will settle the dispute themselves.
Since then, Washington has largely kept its stance deliberately vague – a policy known as “strategic ambiguity” – to avoid antagonising China. Biden was unusually strident in his assertion that US troops would be deployed.
What is clear, however, is that Trump wants more from Taiwan. Last summer he said Taiwan should pay the US for its defence support, particularly after it “took” semiconductor business away from America. “You know, we’re no different than an insurance company. Taiwan doesn’t give us anything,” he said.
Ultimately, however, the truth may be that Trump doesn’t think about Taiwan nearly as much as the Taiwanese think about him. He is much more preoccupied with China.
Trump’s advisers have told The New York Times that the US president wants to strike a wide-ranging deal with China that would go beyond the trading relationship to include big investments, Chinese commitments to buy more American goods and an agreement on nuclear weapons security.
Trump’s “first buddy” Elon Musk, as well as commerce secretary Howard Lutnick and Treasury secretary Scott Bessent, are reportedly encouraging the president to make such an agreement. (Musk’s Tesla has significant business interests in China.)
Proposals include major Chinese investments in the US, big purchases of US crops and planes, and measures that address China’s overcapacity for manufacturing.
“The US business community generally wants more positive US-China relations. They want to invest in China, they want to continue to manufacture in China,” says Sacks.
Trump also wants China to crack down on the fentanyl trade and take back Chinese immigrants who are in the US illegally. Sacks believes tariffs on Chinese goods are an opening shot in negotiations, rather than the new normal.
“Those who believe that Trump is some uber China hawk are telling themselves what they want to hear,” he says.
While Biden framed his foreign policy around a concept of democracy versus autocracy, Trump has no ideological axe to grind.
In fact, Xi and Trump have something in common: the Chinese leader’s coveting of Taiwan mirrors Trump’s own imperialist ambitions to take over Greenland, Canada and Panama.
“His belief is that basically it’s Vladimir Putin, Xi Jinping, himself and maybe MBS in Saudi Arabia who are going to determine the contours of the world,” says Sacks. “Essentially, the smaller powers don’t have a say in that. That is a huge vulnerability for Taiwan.”
Just as Ukraine has been excluded from peace talks with Russia by Trump, so too could Taiwan find itself a pawn in the president’s great game with China.
Who holds the chips?
The parallel between Ukraine and Taiwan only runs so far, however.
“To put it bluntly, Ukraine does not have semiconductors,” says Yin at the National Taiwan University’s Centre for China Studies. “From the US perspective, Taiwan definitely has more value.”
Few industries are as critical – or as concentrated – as semiconductor manufacturing. The microchips that make our cars work, our smartphones connect to the internet and computer servers crunch artificial intelligence software were only invented in the second half of the 20th century, but without them it is no exaggeration to say that the global economy would struggle to function.
Microchips were invented in America, and its companies were the foundation of Silicon Valley. But today, they are disproportionately made in Taiwan.
In the late 1980s, Morris Chang, a former executive at the semiconductor company Texas Instruments (best known for inventing the pocket calculator), arrived in Taipei. The island’s government was in the process of lifting 38 years of martial law, and looking for a high-tech industry to put it on the map.
Chang’s idea was to offer to make microchips for other companies. At the dawn of the personal computer age, semiconductors were becoming increasingly intricate and expensive to make. Chang’s company, TSMC, would take on that complexity, benefiting from huge economies of scale.
It proved to be a tremendous bet. As the transistors that make up microchips shrank to impossible proportions (50bn of today’s smallest transistors would fit on a human fingernail), fewer companies were willing to shoulder the cost of production themselves.
Today, TSMC accounts for two thirds of all contract chip manufacturing. It is East Asia’s most valuable company, worth some $800bn. American companies such as Apple and Nvidia outsource production to the company. Semiconductors make up almost a sixth of Taiwan’s GDP.
“We used to have Intel, and Intel was run by a man named Andy Grove and Andy Grove was a tough, smart guy, I used to read about him when I was a young man,” Trump said during an Oval Office address on Friday.
“He did an incredible job, he really dominated the chip businesses. And then he died and I guess they had a series of people that didn’t know what the hell they were doing and we gradually lost the chip business and now it’s almost exclusively in Taiwan. They stole it from us, they took it from us. I don’t blame them, I give them credit.”
“The only leverage we have is the chips,” says Chen.
Taiwan’s dominance in advanced chip production raises the stakes in any wargaming about the island.
A successful invasion could see China seize the most advanced factories, cutting off supply of critical components. Production would probably cease – the factories are widely believed to have remote kill switches in the event they fall into Beijing’s hands – but the economic impact would be devastating.
For that reason, Taiwan’s chipmaking prowess is seen as its greatest protection against China. The world cannot allow it to fail.
It is an uncomfortable balance, however. A critical chip shortage during the pandemic, which idled car factories, drew government attention to the fragile state of the supply chain.
Fearing its dependence on the island, the Biden administration handed out billions in subsidies in an attempt to encourage companies such as TSMC to set up factories in the US. US export controls also stopped China from accessing the world’s most advanced AI chips, forcing the country to invest heavily in a homegrown industry.
Trump said on Friday: “We have the biggest chip company in the world, probably one of the most powerful companies in the world and they’re coming in and building one of the largest chip plants in the world.”
TSMC’s $100bn investment in the US has proved controversial at home. There are fears that it will hollow out the silicon shield and erode the US stake in Taiwan’s future.
“What has Taiwan gained in return?” Wang Hung-wei, an opposition politician, said.
An increasingly assertive Beijing has also raised concerns that an invasion could happen regardless of the economic consequences.
“The whole population of Taiwan is basically about the size of Shanghai. If the mainland goes for Taiwan, it’s not going to be for economics. It’s really going to be about nationalism and strategy,” says Sean King, a former Asia adviser at the US Department of Commerce who works at advisory firm Park Strategies.
Chen insists that fears Taiwan’s silicon shield might be slipping are “bogus”. Even after a $100bn investment, a mere 5pc to 7pc of TSMC’s production will be based in the US. “It would take decades for the US to build the same ecosystem at the same performance level,” he says.
But if dependence on Taiwan is not disappearing, it may be slipping. The Semiconductor Industry Association expects US capacity to triple by 2032, at which point it will control 28pc of advanced microprocessor manufacturing.
Trump said on Friday: “It’s all about chips, so that was a big thing and we’ll be investing hundreds of billions of dollars in this country and we’ll be taking back a big, big portion of that industry.”
Deals over doctrines
Taiwan has another safety net: geography.
Invading the island would be an incredibly complex military operation. The Taiwan Strait is rough, meaning a seaborne military crossing is only feasible for a few months each year. Ships would be vulnerable to Taiwanese defences and there are few viable places for them to land. Taiwan has shallow waters and steep cliffs.
“The biggest limiting factor for China is that the risk of attempting [an invasion] at this moment is still too high,” says Philip Shetler-Jones, senior research fellow at the Royal United Services Institute (Rusi).
But China is making rapid advances in its military capabilities. Xi Jinping has tasked his forces with being ready by 2027.
Governments on both sides of the strait are ramping up military spending but the difference in scale is dramatic. Chinese defence spending in 2023 was $296bn – nearly 18 times the $16.6bn spent by Taiwan. This is why US support is so important.
“There is a fear that the US can pull out the rug,” says Sacks. “And then what happens? With Trump, the rug can be pulled out in one afternoon.”
For now, Taiwan’s greatest protection may be China’s economic woes. The world’s second-largest economy is grappling with a massive property downturn, sluggish consumer spending and an ageing population, not to mention the trade war with the US.
Economic weakness means any confrontation may not happen on Trump’s watch. The consensus among American analysts is that, based on current trajectories, China will have the capacity to invade only by the early 2030s.
Scott Bessent, US Treasury Secretary, said on Friday he did not believe China would invade Taiwan while Trump was in the White House. “I follow President Trump’s lead and he is confident that President Xi will not make that move during his presidency,” Bessent told CNBC.
Shetler-Jones adds that Trump is unlikely to throw Taiwan to the wolves – but may give ground to China.
Jimmy Carter withdrew diplomatic recognition of Taiwan in 1978 as he normalised relations with Beijing. Ronald Reagan subsequently established the “six assurances” in 1982 that reassured Taiwan of continued US support. The pendulum may now swing back under Trump.
“It is worth imagining a Trump version of a new formula which is more like the Carter version than the Reagan version,” says Shetler-Jones. “It would be very welcome in Beijing.”
Ultimately, the mercurial, transactional nature of the US president makes him hard to predict. He is more motivated by deals than doctrines, and his own expansionists ambitions mean he can sometimes appear more sympathetic to imperialist China than Taiwan, a bastion of democracy.
What is clear, however, is the fact that Taiwan feels less secure than it did a year ago.
“For the last, you know, three or four decades, probably the world hasn’t seen a leader operate in this way,” says Chen. “Even you know, Trump 2.0 compared with Trump 1.0 is drastically different.”
Lai, the semiconductor engineer in Hsinchu, says: “I feel more fear under Trump than Biden.”
