Explained | As Trump Flags China Threat, Why Taiwan Matters To US – Strategic, Economic, And Security Stakes | World News

As tensions across the Taiwan Strait continue to escalate, US President Donald Trump once again highlighted the possibility of China taking action against Taiwan and underlined why the self-governing island remains a central concern for Washington’s foreign and security policy.

In an interview with The New York Times earlier this week, Trump described Taiwan as “a source of pride” for Chinese President Xi Jinping while also acknowledging Beijing’s long-standing claim to the island. Referring to the possibility of military action, Trump said, “He sees this as part of China and what he does is up to him. But I expressed to him that I would be very unhappy if he did this, and I don’t think he will do it. I hope he doesn’t do this.”

China’s claims to Taiwan have become more assertive in recent years, with repeated military signals. In late December 2025, Beijing conducted large-scale military exercises around the island. Chinese state media linked the drills to strengthening ties between Taiwan and the United States, including Washington’s recent approval of an $11 billion arms sale to Taipei.

Similar exercises were held in 2022 after US House Speaker Nancy Pelosi visited Taiwan; it was a move that China condemned as interference in its internal affairs. These flashpoints reflect a conflict with roots deep in 20th-century history.

How Were US-Taiwan Ties Shaped?

The origins of the US-Taiwan relationship date back to the aftermath of the Chinese civil war. In 1949, Communist forces took control of mainland China, while the defeated Nationalist government retreated to Taiwan and established a separate administration. Both sides claimed to represent China.

For decades during the Cold War, Washington recognized Taiwan (formally the Republic of China) as the legitimate government of China and viewed it as a strategic counterweight to communism in Asia. This position began to change under President Richard Nixon, who sought to open relations with Beijing to gain influence over the Soviet Union following the Sino-Soviet split.

Nixon’s landmark visit to China in 1972 was a turning point that irritated Taiwan, which relied heavily on U.S. support. The rapprochement was preceded by years of quiet diplomacy. In 1971, US Secretary of State Henry Kissinger made a secret visit to Beijing, and Chinese leaders signaled their willingness to participate in the visit. Pakistan helped facilitate contacts with Romania and Poland.

According to official records, Kissinger told Premier Zhou Enlai that the talks were historic and assured him that Washington was not pushing for “Two Chinas” or “One China, One Taiwan.” When Zhou asked about Taiwan’s independence movement, Kissinger replied: “Taiwanese? We don’t support that.”

In his memoir The White House Years, Kissinger later described the difficult choice facing Washington: “We were in a position where we had to decide which was more important: 17 million people in Taiwan or 800 million people on the mainland.”

China was also recalibrating its global outlook as it prepared for economic reforms to begin in 1979, and relations with the West were becoming increasingly important.

Three Communiqués and Strategic Uncertainty

US-China relations were formalized with three important joint statements. The 1972 Shanghai Declaration saw Washington accept Beijing’s position that Taiwan was part of China. In 1979, under President Jimmy Carter, the United States officially recognized the People’s Republic of China as the sole legal government of China and cut diplomatic ties with Taiwan.

The third declaration in 1982 reaffirmed the United States’ commitment to the “One China” policy and included a commitment to gradually reduce arms sales to Taiwan, provided that the future of the island was resolved peacefully. At the same time, President Ronald Reagan issued “Six Assurances” to Taiwan, signaling continued U.S. support despite the lack of formal diplomatic relations.

An important distinction remains regarding interpretation. China treats the communiqués as binding commitments, while the United States views them as policy statements. While Beijing insists on the “One China Principle,” Washington deliberately uses the term “One China Policy” and acknowledges China’s claim without openly endorsing it. This cautious wording allows the United States to maintain “strategic uncertainty” about whether it will defend Taiwan militarily.

Why Is Taiwan Vital to the United States?

Taiwan’s importance for Washington is based on strategic, geopolitical and economic foundations.

Geopolitically, the island is located along the Taiwan Strait, one of the world’s busiest shipping routes. The US State Department estimates that approximately 20% of global maritime trade passes through the strait. Bloomberg Intelligence reported that nearly half of the world’s container ships use this route, carrying about $2.45 trillion worth of goods. China’s control over Taiwan would give Beijing the ability to disrupt or block this trade.

Control of Taiwan would also expand China’s Exclusive Economic Zone and strengthen its dominance over surrounding seas and key shipping lanes.

In terms of security, Taiwan is at the heart of the “first island chain” of US allies that include South Korea, Japan and the Philippines. Originally conceived during the Cold War, the concept now forms the basis of efforts to counter China’s growing influence in the Western Pacific.

Economically, Taiwan is indispensable in the global technology supply chain. The island produces approximately 68% of the world’s semiconductors, which are critical for industries ranging from defense and automobiles to consumer electronics. Taiwan Semiconductor Manufacturing Corporation (TSMC) leads a number of major foundries that dominate advanced chip production.

Four of the world’s largest semiconductor foundries are located in Taiwan, according to the Council on Foreign Relations. Any disruption will impact the global economy. Bloomberg economists estimate that a war on Taiwan could cost $10 trillion, or almost 10% of global GDP, dwarfing the economic damage caused by the Covid-19 pandemic.

The possibility of military action has increased under President Xi, but uncertainty remains about how the United States will respond. Because of Trump’s unpredictable approach to foreign policy, questions remain about how far Washington will go to defend a long-standing but diplomatically complicated partner.