Just as he demanded the Europeans spend more on defence when he was president, Republican Donald Trump is hard-headed about Taiwan, too.
Taiwan should pay the United States for its defence, he says.
“I know the people very well, respect them greatly. They did take about 100 per cent of our chip business. I think, Taiwan should pay us for defence,” Trump said in an interview with Bloomberg Businessweek published on Tuesday (July 16).
“You know, we’re no different than an insurance company. Taiwan doesn’t give us anything,” he added.
Taiwan even “stole our chip business”, he claimed, driving down the share price of Taiwan’s leading chipmaker, TSMC.
‘Very, very difficult’ for US to defend Taiwan
He bluntly said it would be “very, very difficult” for the US to defend Taiwan against a Chinese attack.
Beijing was reluctant to bomb Taiwan only because doing so would destroy its chip manufacturing industry, he added.
Taiwan manufactures more than 90 per cent of the world’s most advanced semiconductors.
Taiwan shudders
Trump’s comments sent shudders through the island nation, the Financial Times reported.
Shares of Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker by sales, dropped 2.4 per cent on Taiwan’s stock exchange on Wednesday.
Taiwanese Premier Cho Jung-tai, responding to Trump’s comments, said Taiwan and the US have good relations despite the lack of formal ties, and the island is strengthening its own defences.
US-Taiwan ties
US allies Japan and South Korea bear much of the cost of hosting US military bases in Asia. But as there are no US bases in Taiwan nor any defence treaty, there is no such arrangement for the island.
However, Taiwan spends big on US weapons – and is waiting for $19 billion worth of arms deliveries from the United States.
Even though the US-Taiwan mutual defence treaty was terminated when Washington severed official ties with Taipei and established diplomatic relations with Beijing in 1979, the US remains committed to protecting Taiwan.
Under the Taiwan Relations Act, Washington has to provide defensive weapons to Taiwan.
But Trump has questioned US ties to Taiwan before.
Taiwan chip industry prospered at US expense
Trump reiterated in the Bloomberg interview that Taiwan’s chip industry had prospered at the expense of US business. “They took almost 100 per cent of our chip industry, I give them credit . . . Now we’re giving them billions of dollars to build new chips in our country, and then they’re going to . . . bring it back to their country,” he said.
Taiwan has become the world’s leading chip manufacturer after US chipmakers outsourced production to focus on more profitable chip design.
Now, under pressure from Washington and customers to manufacture chips in the US, TSMC has committed to investing $65 billion to build three fabrication plants in Arizona. In return, the company will receive up to $6.6 billion in grants and $5 billion in loans.
As of the end of 2023, Taiwan was the United States’ 10th largest export market, worth $40 billion, and eighth largest source of imports, worth $88 billion, according to the US Congressional Research Service.
US-Taiwan ties under Trump
Trump’s tough talk on Taiwan is in keeping with his image as a transactional leader, who says he puts America first and expects allies to share the security burden.
Washington and Taipei had excellent relations when he was president, says Reuters.
He and then-President Tsai Ing-wen spoke by telephone shortly after he won the 2016 election, the first such high-level contact since 1979.
The Trump administration sent senior officials to Taiwan and continued to sell it weapons.