What does Trump’s return mean for Taiwan? Five Questions with Wenchi Yu

In the first of a new series of interviews with leading policy experts, CSRI is pleased to have Wenchi Yu discuss what the new US Trump Administration means for Taiwan.

The following is a transcription of CSRI's conversation with Wenchi Yu. Some minor adjustments have been made for clarity and style.

This interview took place on 21 January 2025.

1.

Will Taiwan be hit by Trump’s trade wars?

Andrew Yeh: Trump accused Taiwan of “stealing” America’s chip industry on the Presidential election campaign trail, while threatening a blanket global tariff of 10% on all imports into America. While China and others seem the main focus of Trump’s ire, how seriously should Taiwan take these threats?

Wenchi Yu: Taiwan will not be exempt from any trade wars or trade tariffs in the coming Trump administration. For anyone who's watched Trump's recent speeches, it’s clear that he holds a view that the US has been treated unfairly by the whole world. His whole message and mission is to make people respect America again. Part of this means using tariffs as a way to entice foreign investment into the US and creating more domestic employment rather than outsourcing jobs and work to foreign countries.

So yes, I think Taiwan should be worried, but more importantly, Taiwan should be prepared. We have already seen encouraging signs that Taiwan has been preparing. Several Taiwanese tech companies have announced that they are planning to invest more in the United States in places like Texas. With the US as a major market for Taiwanese firms, not just in chips but across the whole electronics and computing sectors, I think we're going to see more companies following suit.

2.

What is the future of US-Taiwan chip cooperation?

Andrew Yeh: Trump has pledged to make the US a world leader in chips, but has also expressed opposition to US funds supporting foreign manufacturers. Taiwan’s TSMC – the world’s leading chip manufacturer – has secured $6.6bn grants and $5bn in loans from the US Department of Commerce. Does the US still need TSMC, or can it go it alone?

Wenchi Yu: There are two ways of looking at this. One is what Trump says, the other is what his administration actually does.

In the case of semiconductors, my guess is that US companies and the government will have no choice but to work very closely with the Taiwanese government as well as Taiwan’s semiconductor industry. If we focus on it more substantively, it's impossible to just carve Taiwan out of the semiconductor industry and supply chain.

This is especially true in the case of TSMC. The whole world needs TSMC because it has such a unique position in the chip-making world. It's not just about TSMC’s advanced manufacturing capabilities, but also about its business model – its pricing, production yield rates and customer service is far ahead of other companies. There are really no other competitors for all these reasons, so TSMC right now is irreplaceable. TSMC has been building some of its manufacturing capacity in the U. S. in the past few years, but it has also been doing so in places like Germany and Japan. So the US cannot replace TSMC's global competitiveness entirely in the foreseeable future.

But whether Trump is going to frame it that way is a different issue. Trump could very easily work with Taiwan while also putting forward a narrative that says the US has reclaimed the leadership in chip production.

3.

Will China test Trump’s commitment to Taiwan?

Andrew Yeh: In recent years, China has steadily increased the scale of its military exercises and other ‘grey zone’ coercion tactics against Taiwan. Are we likely to see an escalation in these activities, as Beijing seeks to test the new Administration’s resolve?

Wenchi Yu: For sure, China will seek to test the US commitment to Taiwan under Trump. Especially because Trump doesn’t seem to have a firm position on Taiwan. China doesn't really know what Trump's bottom line on Taiwan is, and has very little to read from other than a few remarks on the issue made during his previous term. China will not just want to test Trump himself, but also the whole Trump administration, with Trump’s foreign policy team holding views which may be very different to his own.

Whether Trump and his team will view Taiwan as a stand-alone issue apart from the broader China policy issue depends on the individuals within his foreign policy team. By this I mean how many members on his foreign policy team care about Taiwan deeply and actually will support Taiwan as a democracy, a vibrant economy, and a strong ally to the US, rather than just for the sake of poking China. I do not think Trump has a strong interest in looking at Taiwan as a standalone issue, which means he will likely view Taiwan as part of his overall calculation on his China and Indo-Pacific policy more broadly.

4.

How do you rate Trump’s cabinet picks?

Andrew Yeh: Trump’s cabinet picks include many China skeptics, including Marco Rubio for Secretary of State and Michael Waltz for National Security Advisor. Ivan Kanapathy, who has extensive Taiwan experience, will form the core China team of the National Security Council. Do you foresee any tangible shifts of the US’s diplomatic approaches and policies towards Taiwan?

Wenchi Yu: Among some of these people he's named, I would say the person who is going to matter the most and be working most directly on Taiwan would be Ivan Kenopathy. He, in my view, is one of the best in Washington when it comes to understanding Taiwan and viewing Taiwan as an independent entity, not always in relationship to China. He has spent significant time in Taiwan, being stationed at the American Institute in Taiwan as a defence attache, and speaks fluent Mandarin. He really understands Taiwan’s issues, especially on defence. Interestingly, although he's generally seen as a China Hawk, whenever there have been debates over the merits of the US adopting ‘strategic clarity’ over ‘strategic ambiguity’ on Taiwan, Ivan has always advocated for ambiguity. He believes that strategic ambiguity remains the best approach to preserving and protecting Taiwan.

5.

What is the mood in Taiwan as the new US Administration takes place?

Andrew Yeh: The US is Taiwan’s No. 1 ally, and getting its support is crucial to guaranteeing its security. At the same time, Taiwan’s domestic politics is increasingly fractured and under significant pressure from China. How are Taiwanese leaders responding to the new US Administration?

Wenchi Yu: Anyone who knows anything about Taiwan's politics knows that it's extremely divisive and very political right now. In Taiwan there is, in my view, a real anxiety about how the US might act. Sometimes, this may seem blown out of proportion, but the whole world is anxious about Trump because he's so unpredictable and no one really knows for sure what he's going to do.

This worry is being used by Taiwanese media to fuel sensationalised debates about whether Taiwan is doing enough to make sure Trump is not offended, to ensure that he will still protect Taiwan or avoid using Taiwan as a bargaining chip for negotiating with Beijing, and so on. This in turn can be politicised as a way of attacking the ruling DPP party, saying they're not doing enough to win over Trump and protect Taiwan. These sensational debates often take away from the ability to have a more rational and reasonable conversation about what the new US-Taiwan relationship might look like.

One policy debate that we will see, aside from the semiconductor and other companies moving production to the US, is an increase in the level of Taiwanese defence spending, particularly on US weapons and equipment. Pretty much everyone who is senior in the US government right now has said that Taiwan needs to do more to increase its defence budget. So, increasing defence spending is the first, very concrete step that Taiwan can take to ensure that Trump views Taiwan favourably rather than as a liability. This is something that a lot of people in the current Taiwan administration are actively planning for.

Beyond this, Taiwan must make sure that all channels of communication with the US administration are open. In general, my sense is that Taiwanese policymakers are pleased with Trump’s appointments so far in this regard, and are confident that they can maintain close coordination. Appointments such as Secretary of State Marco Rubio, who has been such a strong and longstanding advocate for Taiwan, give people a lot of comfort.

Wenchi Yu is a Nonresident Research Fellow at Harvard Kennedy School’s Ash Center for Democratic Governance and Innovation, a life member of the Council on Foreign Relations and an Asia 21 Fellow. She hosts several media programs discussing issues with relevance to China, US, and Taiwan. Andrew Yeh is the Executive Director of CSRI.