[Big read] ​After Xi-Trump summit, a jittery Taiwan takes stock

On 20 May, Taiwan President Lai Ching-te delivered a speech marking the second anniversary of his inauguration, formally opening the second half of his four-year term. He recalled Taiwan’s first direct presidential election in 1996, saying that repeated peaceful transfers of power have shown that Taiwanese democracy is mature and irreversible. He also stressed that Taiwan’s future cannot be decided by external forces, nor can it be held hostage by fear, division or short-term gain, but must be determined together by its 23 million people.

The backdrop to his speech was far from relaxed. Just a week prior, Beijing had hosted the Xi-Trump summit. Chinese President Xi Jinping placed the Taiwan issue at the very core of China-US relations, and while US President Donald Trump said afterwards that Washington’s Taiwan policy was unchanged, he also declared that he did not want to see “somebody go independent”, and openly described US arms sales to Taiwan as a useful negotiating chip.

Though the US has repeatedly stressed that its policy on Taiwan remains unchanged, what has most worried Taipei is the prospect of the Taiwan issue being included in Trump’s transactional approach to diplomacy. Taiwan has long taken comfort in the belief that US arms sales are underpinned by the Taiwan Relations Act, by congressional backing and by administrative precedent. When Trump explicitly labels those sales as negotiating chips, it is hard for Taiwan not to be on tenterhooks.

Following the summit, major geopolitical research institutes such as National Chengchi University’s Institute of International Relations (IIR) and National Taiwan University’s Center for China Studies (CCS) held a series of forums to assess how this meeting of global strongmen could affect Taiwan.

At one such forum held at the IIR, Albert Chiu, a political science professor at Tunghai University, argued that Trump’s Taiwan policy vacillated between two logics. On the one hand, the US national security system continues to operate by the book, treating Taiwan in official strategy documents as a key interest in its Indo-Pacific blueprint; on the other hand lies Trump’s own impulsive, deal-driven instinct to extract benefits whenever an opportunity arises.

He said Trump is aware that Xi wants to talk about Taiwan and that Trump understands Taiwan’s value in US strategy — but if there is room for trade-offs on issues such as rare earths, agricultural purchases or the situation in Hormuz and Iran, Trump could still be tempted.

In other words, the institutional guarantees underpinning US support for Taiwan remain in place, but the current master of the White House does not play by the usual rules, much less by institutional constraints. Taiwan is still part of US interests, yet at certain moments it could be placed on the list of items to be haggled over between China and the US.

National Taiwan University political scientist Simon Chang added that from the perspective of international order, in Trump’s second term the US is no longer maintaining a liberal international order in the way it did under Joe Biden, but is instead prioritising American primacy — even to the point of defending US private interests rather than providing public goods within a liberal international order as it did in the past. As a result, many countries are seeking to de-risk, while Beijing is trying to carve out stability amid uncertainty, capitalising on new frameworks to shape short-term China-US ties and dilute unilateral pressure from the US and Trump.

The impact of “America First” on Taiwan was also evident in Trump’s comments in a Fox News interview after the summit. He clearly stated “I’m not looking to have somebody go independent”, as good as a warning to Lai, which was also interpreted as a major gain Beijing reaped from the meeting.

Lai: Taiwan not the provocateur

In response, on the afternoon of 17 May at a youth forum marking the Democratic Progressive Party’s (DPP) 40th anniversary, Lai defined “Taiwan independence” as simply meaning that Taiwan does not belong to the People’s Republic of China, and that the Republic of China and the PRC are not subordinate to each other. That evening, he wrote on Facebook that Taiwan is the defender of the status quo of peace and stability in the Taiwan Strait and the region, and that “there is no Taiwan independence problem” when it came to upholding the status quo of the Republic of China, and that peace in the strait would not be sacrificed or traded away.

In his 20 May address, Lai did not retreat back into ambiguity. He said that Taiwan is willing to engage in healthy and orderly exchanges with mainland China under the principles of parity and dignity, but rejected “united front tactics that package unification as peace”. Lai stated that peace cannot rely solely on goodwill, much less be built upon concessions or illusions, but that peace depends on uniting to cultivate Taiwan’s national strength, demonstrating a clear national will and cooperating closely with Taiwan’s global democratic partners.

On his flight home after visiting China, Trump told reporters aboard Air Force One that on the question of arms sales to Taiwan, he would make a decision “over the next fairly short period” after talking to “the person that right now is… running Taiwan”.

When asked by reporters at Joint Base Andrews in Maryland on 20 May whether he planned to call Lai, Trump replied again: “I’ll speak to him. I speak to everybody.” He did not say when such a conversation might take place.

At his 20 May press conference, Lai was asked what he would say to Trump if he had the chance to convey the feelings of Taiwan’s society. He listed four points: that peace and stability in the Taiwan Strait are essential to global security and prosperity; that the mainland is the true destabilising force in the region; that Taiwan’s increased defence spending and purchase of US arms are necessary means to safeguard its security and cross-strait peace; and that the Republic of China (Taiwan) is a sovereign and independent state, and no country has the right to annex Taiwan.

Lai’s message was aimed not only at Beijing but also at Washington. After Trump’s remark that he did not want to see anyone move towards independence, Lai must show that Taiwan is not the provocateur. At the same time, he cannot walk back on his sovereignty narrative under pressure from Beijing. Hence, he placed emphasis on “maintaining the status quo” and “achieving peace through strength”: Taiwan would not be the side that escalates conflict, but neither will it accept being treated as lesser.

Chang Wu-yen, director of Tamkang University’s Center for Cross-Strait Relations, analysed that Beijing would not trade Taiwan’s sovereignty or status with the US; since the Taiwan issue is in Beijing’s words the core of China’s core interests, it is not a bargaining chip. He felt that what Beijing really wants is for Washington to be clear about red lines, avoid miscalculation and manage differences — especially to prevent US-Taiwan ties from triggering a crisis in China-US relations.

He highlighted four issues most likely to become focal points in China-US negotiations: arms sales to Taiwan, Lai’s transits through the US, US-Taiwan visits by high-ranking officials as well as further moves by the US administration or Congress to strengthen ties with Taiwan. In other words, Taiwan’s sovereignty might not be explicitly put on the table, but its room to manoeuvre, the pace of arms sales and its political visibility could all be affected by China-US “management of differences”.

In a commentary, Lai I‑chung, president of the Prospect Foundation and former executive director for the DPP’s mission in Washington and of its Department of China Affairs, likewise cautioned that Trump’s remarks about Taiwan on the flight back to the US do not necessarily mean US policy is about to change, but do indicate that his approach to the Taiwan question is becoming a new variable.

In other words, international order itself is loosening, and Beijing is even more eager to draw Washington into “jointly managing Taiwan independence”. Thus, Taipei cannot rely solely on the old security formulas it is used to in appraising the current situation. For Taiwan, what truly bears watching is not only what Trump says, but whether concrete action via-a-vis arms sales, visits and transit stops would be delayed, watered down or reshaped as a result of China-US communication.

From defence budget to political direction

In his 20 May address, Taiwan President Lai Ching-te addressed domestic politics in the most direct way when discussing the defence budget. He criticised the Legislative Yuan for failing to fully pass the draft act for the special defence budget bill, warning that this would inevitably have a serious impact on the status quo of peace and stability across the Taiwan Strait. 

The government, he said, would seek to rectify this by introducing an alternative special act and, through supplementary allocations and higher annual defence spending, pursue commercial procurement, commissioned projects, international cooperation, and self-sufficiency in its defence industry. These efforts would include the production of unmanned ground, marine and aerial vehicles, as well as the establishment of intelligent and sustainable defence capabilities.

Lai also stated at a press conference that Trump had repeatedly affirmed that US policy towards Taiwan remains unchanged, and that decisions on arms sales would be made soon.

Lai was in fact sending a dual message. To the US, he sought to demonstrate that Taiwan is prepared to take responsibility for its own defence. To the opposition parties, he linked the obstruction of defence procurement budgets directly to Taiwan’s security. Defence is no longer merely a military issue; it has also become a political test of whether a minority government can persuade the legislature, public, and international partners that Taiwan possesses the resolve to defend itself.

Arms sales as a business transaction?

However, Tsai Tung-Chieh, distinguished professor at the Graduate Institute of International Politics at National Chung Hsing University, warned during a forum at National Taiwan University prior to Lai’s 20 May address that Taiwan cannot regard US arms sales as the single path that can forever be relied upon.

He said that if Trump regards arms sales as business, then they effectively become a contract or a purchase order. When Beijing is able to replace that military purchase order with a bigger procurement order, arms sales may come to be framed within a transactional logic.

Thus, Taiwan must continue to develop its own domestically produced weaponry and consider other ways of acquiring defence capabilities, rather than relying solely on US arms sales.

Tsai stressed that US policy towards Taiwan has constantly changed — sometimes more, sometimes less. What Taiwan can do is “not harbour any wishful expectation that an enemy will not invade, but instead rely on its own full preparedness to deal with an enemy invasion”.

Tunghai University’s Chiu also warned that if Trump really brings arms sales to Taiwan into talks with Xi, the principle that arms sales to Taiwan would not be discussed with Beijing in advance — as set out in the Reagan-era “Six Assurances” to Taiwan — could be broken.

He described it as something that would not necessarily collapse overnight, but more of a “boiling frog” scenario, gradually weakening Taiwan’s existing security framework.

This also explains why Lai emphasised defence self-sufficiency in his address, including the importance of Taiwan’s domestically built Narwhal submarine and the development of the drone industry. He also criticised the opposition for cutting budgets for drone procurement and industry development, saying this would harm both its defence capabilities and Taiwan’s defence self-sufficiency.

The plight of a minority government

Beyond external challenges, pressure on Lai’s domestic agenda also intensified ahead of 20 May. On 19 May, the Legislative Yuan held the first recorded vote in constitutional history on a presidential impeachment motion. The motion failed as it received 56 votes in favour and 50 against, falling short of the two-thirds majority required.

The impeachment was never likely to succeed, but scheduling it for the eve of the second anniversary of Lai’s inauguration carried more symbolic than substantive significance. In remarks delivered the following day, Lai acknowledged that differences between the ruling and opposition camps over the direction of governance had led to an unprecedented deadlock in the legislature, preventing the smooth passage of appointments, budgets and bills.

This suggests that the Lai administration now regards an opposition-controlled legislature as the greatest domestic obstacle in the second half of its term.

The clash between the ruling and opposition camps became even more apparent at the press conference. When asked about Kuomintang (KMT) chairperson Cheng Li-wun’s remarks that the island’s security should stand on “two legs” — one focused on strengthening self-defence, the other on striving for cross-strait peace — Lai swiftly pushed back, saying Cheng’s “two legs” argument did not hold firm. He said that by leading efforts to block arms procurement, she was effectively severing one leg herself; and by meeting Xi while embracing the 1992 Consensus and abandoning Taiwan’s subjectivity, she was allowing Beijing to cut off the other.

He further criticised the KMT and mainland China for “packaging reunification as peace”, arguing that this was neither about building peace nor defending the sovereignty of the Republic of China.

This makes clear that Lai’s notion of “unity” rests on clear conditions: competition is acceptable, but Beijing’s definition of the “one China” framework cannot be accepted; exchanges are possible, but they must be conducted on the basis of equality and dignity; and peace can be pursued, but not if it serves as a guise for reunification.

Such rhetoric may help consolidate the pan-Green camp’s core support base, but it also further narrows the room for negotiation between the ruling and opposition camps. In particular, as arms procurement, the budget and the year-end local elections become increasingly intertwined, it is unlikely that the intensifying clashes among the pan-Blue, pan-Green and pan-White camps will ease simply because of Lai’s 20 May appeal.

Playing the economy and social welfare card

Beyond defence and cross-strait relations, Lai also highlighted economic and social welfare priorities in his 20 May address. He noted that Taiwan’s full-year economic growth rate last year reached 8.68%, while growth for the first quarter of this year was at 13.69%, marking the highest single-quarter growth in 39 years. However, he stressed that economic growth should be more than just statistics in a report, and must be felt tangibly by the public.

He also announced that the government would introduce a NT$100 billion (US$3.2 billion) plan to accelerate the upgrading and transformation of small and medium-sized enterprises and traditional industries, enabling the technology sector to drive traditional industries. 

He also elevated Taiwan’s declining birth rate to a matter of strategic importance, unveiling a new family support strategy, which includes providing a monthly NT$5,000 child development allowance for each child aged zero to 18. 

Lai’s remarks also reflect that Taiwan’s strong economic figures over the past two years have not necessarily translated into public support, as people continue to feel the strain of high housing prices, stagnant wages, falling birth rates, difficulties in the energy transition, and deepening partisan confrontation.

The day after Lai’s address, Chen Fang-Yu, an associate professor at Soochow University’s Department of Political Science said at a forum, in response to a question from Lianhe Zaobao, that a key signal from Lai’s speech was a refocusing of the policy agenda on domestic affairs in Taiwan, particularly issues of economic distribution.

He thinks that cross-strait tensions are unlikely to change significantly in the near term, and that the Lai administration should therefore devote greater attention to domestic priorities, putting forward more concrete policies to support “industries that have not benefitted from growth dividends, and to assist long-suppressed sectors such as machine tools, traditional industries, small and medium-sized enterprises, as well as hardware and plumbing hardware industries”.

The local elections at the end of this year will be the first major midterm test since Lai took office. If the DPP loses key counties and cities, the KMT and the Taiwan People’s Party would have stronger grounds to claim that the Lai administration has lost its public mandate. Conversely, if the DPP retains its core strongholds or even makes gains in some metropolitan areas, Lai would be in a position to turn the tables and press the opposition to take responsibility for issues of security and governance.

As such, these policies aimed at addressing people’s day-to-day concerns may also be intended to pave the way for the year-end local elections.

In the second half of his term, Lai faces mounting internal and external risks: a Beijing increasingly eager to turn the Taiwan issue into a red line, an even more unpredictable Trump and a deeply confrontational political landscape in which the opposition controls the legislature. 

Against this backdrop, Lai declared in his 20 May address that Taiwan must “engage with the world, and bravely shape our future”. Yet with partisan conflict so highly divisive that even a minimum consensus on security in Taiwan is difficult to forge, Lai may first find himself struggling to move forward before he can even realise that vision.

This article was first published in Lianhe Zaobao as “赖清德下半场内外交困 依靠美军保台此路不通？”.

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