Indo-Pacific — 2026-05-15

Stimson Center Analysis: Trust Deficit Between U.S. and Taiwan Threatens Deterrence

BLUFWashington's semiconductor reshoring drive is hollowing out the supply-chain interdependence underpinning Taiwan's security, and the resulting collapse in Taipei's confidence weakens deterrence faster than any defense-budget increase can rebuild it.

A Stimson Center analysis reports that a February 2026 trade agreement tied U.S. semiconductor tariffs to Taiwanese investment levels, with the administration targeting reshoring of 40% of advanced U.S. chip demand. The Trump administration pressed Taiwan to raise its defense budget to 10% of GDP (roughly $100 billion), while the Legislative Yuan passed a 3.2% of GDP budget, short of the $40 billion President Lai Ching-te sought. A Democracy Foundation poll cited in the analysis found majorities in Taiwan now doubt U.S. willingness to assist in a cross-strait contingency. The analysis further reports that the administration denied Lai a transit through New York in July 2025 and delayed an arms sale package until after Trump's summit with Xi Jinping.

Analysis
Washington's reshoring push signals to Taipei and Beijing alike that the silicon shield is transitional: tying tariff relief to Taiwanese investment levels dismantles the supply-chain interdependence that anchors Taiwan's security in U.S. domestic calculus. Taiwan's 3.2% GDP defense budget reflects the hard ceiling of divided government and a sluggish non-chip economy, not insufficient will. Denying Lai a New York transit and delaying an arms sale until after the Trump-Xi summit reinforced Beijing's read that Taipei's interests yield under pressure. Majority public doubt about U.S. reliability, per a single Stimson Center analysis, erodes both legs of deterrence: adversary belief and defender resolve. If domestic chip production scales sufficiently, U.S. commitment could grow more durable, no longer contingent on those supply chains.

1 sources

The Trust Deficit: Will US-Taiwan Frictions Weaken Deterrence? - Stimson Center