Taiwan’s push to raise defence spending to at least 3 per cent of its gross domestic product in an effort to meet US expectations has raised questions over feasibility and a potential squeeze on other government expenditure.
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But analysts say the biggest question is whether the budget increase – aimed at demonstrating the island’s resolve to defend itself – will be enough to satisfy US President Donald Trump.
Taiwan’s leader William Lai Ching-te announced the move on February 14 after a high-level security meeting held in response to Trump’s renewed threats to impose higher tariffs on the island’s chip products.
“A special budget will be prioritised to ensure that defence spending reaches the goal of more than 3 per cent of GDP,” Lai said, identifying the increase as a key government priority for the year.
The announcement came just hours after Trump accused Taiwan of taking semiconductor business away from the US, vowing to bring it back. He also threatened to impose high tariffs and economic sanctions as soon as April to ensure “fair” and “reciprocal” trade while reducing America’s trade deficit with its partners.
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Taiwan’s trade surplus with the United States surged to a record high of US$64.88 billion last year, according to Taiwanese government data.