TAIPEI – Former U.S. President and Republican presidential candidate Donald Trump suggested Taiwan should pay the United States for its defense, causing shares of Taiwan Semiconductor Manufacturing Company (TSMC) to drop on Wednesday.
In an interview with Bloomberg Businessweek, Trump stated, “I know the people very well, respect them greatly. They did take about 100% of our chip business. I think Taiwan should pay us for defense.” He likened the U.S. to an insurance company, emphasizing that Taiwan offers nothing in return for its protection.
The United States is Taiwan’s most significant international supporter and arms supplier, though no formal defense agreement exists. The U.S. is, however, obligated by law to provide Taiwan with the means to defend itself. Taiwan has focused on modernizing its defense capabilities, including developing its own submarines, and has repeatedly asserted that its security depends on its own efforts.
Responding to Trump’s remarks, Taiwan Premier Cho Jung-tai highlighted the strong relationship between Taiwan and the U.S., despite the absence of formal ties. He affirmed Taiwan’s commitment to bolstering its defense budget and responsibility to the international community, stating, “We are willing to take on more responsibility; we are defending ourselves and ensuring our security.”
Amidst rising tensions with China, which views Taiwan as its territory, Taiwan has faced increased Chinese military activity over the past four years. The U.S. maintains a stance of “strategic ambiguity” regarding Taiwan’s defense, although President Joe Biden’s comments have occasionally suggested a stronger commitment to defending the island.
TSMC, a critical player in global semiconductor manufacturing, saw its shares fall by 2.4% on Wednesday, while the broader market index dropped by 1%. Analysts like Allen Huang of Mega International Investment Service downplayed Trump’s comments as political rhetoric, reaffirming TSMC’s market strength and competitive edge.
TSMC is investing heavily in new factories overseas, including $65 billion on three plants in Arizona, but insists that most manufacturing will stay in Taiwan. Additionally, Taiwan awaits a backlog of $19 billion in U.S. arms deliveries, with ongoing efforts to expedite these shipments.
Delays in U.S. weapons deliveries, exacerbated by the focus on supporting Ukraine, have been a concern for Taiwan. Recently, the U.S. Congress passed a foreign aid package, including military support for Taiwan, to address these delays.
China’s recent military exercises around Taiwan, following President Lai Ching-te’s inauguration, and ongoing “grey zone” warfare tactics have kept tensions high. Beijing has never renounced the use of force to control Taiwan, while President Lai advocates for dialogue, which has been consistently rebuffed by China.
