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TAIPEI, July 17 (Reuters) – Taiwan should compensate the U.S. for its defense support as it doesn’t provide any returns, Republican presidential candidate Donald Trump told Bloomberg Businessweek, causing shares of Taiwanese chip manufacturer TSMC (2330.TW) to drop on Wednesday.
“I respect the Taiwanese people greatly, but they have taken nearly 100% of our chip business. Taiwan should pay us for defense,” Trump said in an interview on June 25, published on Tuesday. “We’re no different than an insurance company. Taiwan doesn’t give us anything.”
The U.S. is Taiwan’s main international supporter and arms supplier but lacks a formal defense agreement like those with South Korea and Japan. However, the U.S. is legally bound to supply Taiwan with defense means.
Taiwan prioritizes defense modernization, including developing its own submarines, and insists that its security is primarily its own responsibility.
Taiwan Premier Cho Jung-tai responded to Trump’s comments by emphasizing the good relations between Taiwan and the U.S., despite the lack of formal ties, and Taiwan’s commitment to strengthening its defense. “Taiwan has steadily increased its defense budget and demonstrated responsibility to the international community. We are willing to take on more responsibility; we are defending ourselves and ensuring our security,” he said.
Taiwan’s foreign ministry declined to comment on Trump’s remarks.
China, which views Taiwan as its territory, has increased military activities around the island to pressure its democratically governed government, which rejects China’s sovereignty claims.
U.S. President Joe Biden has upset China with comments suggesting U.S. defense of Taiwan if attacked, deviating from the long-held U.S. stance of “strategic ambiguity.”
The U.S. and Taiwan have had no official diplomatic or military relationship since 1979, when the U.S. recognized Beijing and ended a mutual defense treaty.
TSMC, a dominant chipmaker for AI, smartphones, and fighter jets, saw its shares fall 2.4% on Wednesday, with the broader market down 1%. “Trump’s comments were blunt, seen as political rhetoric,” said Allen Huang, a VP at Mega International Investment Service. “TSMC remains a strong company, outperforming many U.S. rivals.”
TSMC is investing billions in new factories overseas, including $65 billion on three plants in Arizona, but says most manufacturing will stay in Taiwan.
Taiwan has a backlog of $19 billion in U.S. arms deliveries, which U.S. officials have pledged to expedite. Since 2022, Taiwan has faced delays in U.S. weapon deliveries, as manufacturers prioritized Ukraine.
In April, the U.S. Congress passed a foreign aid package including arms support for Taiwan, after House Republican leaders allowed a vote on $95 billion in military aid for Ukraine, Israel, Taiwan, and Indo-Pacific partners.
China held war games around Taiwan after President Lai Ching-te’s inauguration in May, as punishment for his separatist speech, according to Beijing. China has also used grey zone warfare against Taiwan, including sending balloons and frequent air force missions near the island.
Beijing has never renounced the use of force to bring Taiwan under its control. President Lai, advocating self-determination for Taiwan, has repeatedly offered talks but been rebuffed.
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