Republican presidential candidate Donald Trump stirred controversy when he suggested that Taiwan should compensate the U.S. for providing defense equipment, claiming the island nation receives significant benefits without contributing in return. His remarks, made during an interview with Bloomberg Businessweek conducted on June 25 and published late Tuesday, sparked a downturn in Taiwan’s stock market on Wednesday.
“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,” Trump asserted in the interview, likening the U.S. role to that of an insurance provider.
Following Trump’s comments, Taiwan’s stock market saw declines, with the Taiwan Weighted index dropping by 0.2%. TSMC (TW:2330) (NYSE), Taiwan’s largest stock and a leading contract chipmaker globally, saw its shares slide by 2%. Trump highlighted Taiwan’s pivotal role in semiconductor manufacturing, acknowledging it as a critical asset and a focal point in U.S.-China relations.
Taiwan holds a crucial position in the global technology supply chain, particularly in semiconductor production, where it plays a central role through companies like TSMC, the island’s most valuable enterprise.
While the U.S. is Taiwan’s primary defense equipment supplier, there exists no formal agreement between the two nations, intensifying the strategic friction between the U.S. and China. Trump’s remarks reverberated in Chinese markets as well, contributing to declines in stocks amid concerns over potential trade tensions under a Trump presidency. His previous imposition of tariffs on China in the late-2010s had triggered a significant trade dispute between Washington and Beijing.
In response to Trump’s statements, Chinese stocks faced moderate losses, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes declining by 0.1% and 0.5% respectively, while Hong Kong’s Hang Seng dipped by 0.1%.
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