Taiwan — caught between Xi Jinping’s aggressiveness and Donald Trump’s unpredictability

If Donald Trump imposes high tariffs on China, Taiwanese companies who have bases in the mainland will be in a hurry to relocate back to Taiwan, or elsewhere

Donald Trump’s return to the White House as the 47th President of the United States brings with it a lot of uncertainty in the global politics, including in the US’ ties with China and Taiwan. An analysis of the situation across the Taiwan Straits shows that Taiwan is stuck between Xi Jinping’s ‘aggressiveness’ and Trump’s ‘unpredictability’.

The feeling of uncertainty and anxiety towards Trump’s approach towards Taiwan is quite apparent. These also have a strong root in the statements made by Trump during his campaign. As per Chen Ming-chi, a former senior adviser on Taiwan’s National Security Council, “there is more anxiety this time”. This is clear from the fact that Taiwanese President William Lai, who belongs to the Democratic Progressive Party (DPP), has decided to not give Trump a congratulatory call. Lai’s predecessor Tsai Ing-wen had called Trump after his last election — a call which was received by the White House; it led to a lot of opposition from Beijing. Lai doesn’t feel confident to receive a similar response this time, underscoring the anxiety this time. Lai, however, wished Trump on X and wished that the bilateral ties will continue.

In addition to general political anxiety, Trump’s presidency poses a lot of challenges to Taiwan’s economy as well. The Taiwanese and Chinese economies are interlinked, with many Taiwanese companies having investments in the mainland. Even though Taipei has been pushing for a southbound policy which provides an alternative to Beijing, the process has not been very successful.

The general understanding is that Washington’s approach towards China will be on the same lines of what it was during Trump’s earlier tenure in office: more tariffs and more aggression. As per Wang Dong, professor of international relations at Peking University “Trump 2.0 is likely to be more destructive than the 2017 version”.

Trump, during his election campaign, said that he was keen to impose around 60% tariffs on Chinese goods. This has the potential to further complicate Taiwan-US ties. The Taiwanese companies who have bases in the mainland will be in a hurry to relocate back to Taiwan, or elsewhere. As per Taiwan’s Economics Minister Kuo Jyh-huei, “the government will support Taiwanese companies seeking to shift production away from China”. However, the process will be long drawn and not very welcomed by Beijing, given its current economic challenges and slowdown.

This when coupled with the ongoing ‘chip-war’ and access to semi-conductor technology between Beijing and Washington, tends to paint a further grim picture. The statements made by Trump during his campaign asserting that Taiwan has stolen the chip industry and jobs from the United States, will lead to further challenges. The ‘America First’ push and rise in tariffs can pose a challenge for the Taiwanese chip manufactures like the Taiwan Semiconductor Manufacturing Co. (TSMC), which makes up for 62% share of the global semiconductor foundry market. The US has already started the process of collating information regarding semi-conductor sales to Beijing.

The Chinese aggression towards Taiwan has consistently increased in the last four years, especially after Nancy Pelosi’s 2022 Taipei visit. Beijing has regularly conducted military exercises across the Taiwan Straits and Xi has consistently asserted that Taiwan is the ‘sacred territory’ and reunification is ‘inevitable’.

One of the major sources of support for Taiwan is the arms sales from the US, something which Washington is treaty bound to undertake. The Taiwan Relations Act (TRA) of 1979 states that, “to provide Taiwan with arms of a defensive character”. However, Trump’s statement that “they don’t pay us money for the protection, you know? The mob makes you pay money, right?” can jeopardise Taiwanese security.

Trump is also keen that Taipei should increase its defence spending to 10 % of its GDP and continue to buy more weapons from Washington. However, he has also made statements underscoring that Xi “respects him and knows that he is crazy” and, thus, the US may not need to undertake a blockade to prevent Chinese military aggression.

Trump in his second term is likely to have a transactional relationship with Taiwan. However, given its geopolitical limitations, a major rise in the Taiwan’s defence budget is likely challenging as it will invite Beijing’s ire, and can result in further blockades and exercises across the Taiwan Straits.

In addition, if the US continues to block Chinese imports, Xi may look for an alternative and express his anger towards Taiwan. Reunification is a national goal closely linked to national rejuvenation and Xi would not want to appear weak when it comes to an issue of China’s sovereignty. Even Trump has indicated that “Taiwan is in a tough spot” and given that it is 11,500 kilometres away from the US, it may have to depend on itself for defence, in case of Chinese aggression.

(Gunjan Singh is Associate Professor, OP Jindal Global University.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.