President Trump sparked concern in Taiwan and among foreign policy analysts after saying a delayed $14 billion arms package for the island could be used as leverage in negotiations with China. Following his visit to Beijing, Trump described Taiwan arms sales as a ‘very good negotiating chip’ and said future approval could depend on China.

It was interesting wording, as the U.S. has traditionally treated support for Taiwan as more of a security issue rather than a bargaining chip. Although the U.S. does not formally recognize Taiwan as an independent country, federal law does require Washington to provide the island with defensive capabilities.

For decades, presidents from both parties have tried to maintain that balance while avoiding direct military confrontation with Beijing.

Trump also commented on Taiwan’s semiconductor industry, saying he would like more chip manufacturing to be moved to the United States. Taiwan currently produces more than 90% of the world’s most advanced semiconductors, and its largest company, TSMC, is already making major investments in Arizona.

China considers Taiwan part of its territory and has repeatedly stated that it will use force to bring the island under Beijing’s control. Military exercises around the island have become more frequent in recent years, and tensions often rise after arms sales or political visits involving the United States.

Taiwan’s security strategy relies heavily on U.S. protection, especially during periods of pressure from China. If military support becomes tied to trade negotiations or other political priorities, officials in Taipei may find it harder to gauge how reliable U.S. backing will be.

Taiwan’s semiconductor industry is among the world's leading, producing over 90% of the world’s critical chips used in smartphones, AI systems, vehicles, and military technology. The U.S., as well as major companies, has spent years trying to reduce its dependence on a single manufacturing hub, but as of now, Taiwan remains critical to global supply chains. This means maintaining stability in the region is a top priority.

Trump’s comments come as China continues warning against what it considers foreign interference in Taiwan, with President Xi Jinping recently cautioning that mishandling the issue could lead to ‘clashes and even conflicts.’

While most attention has been on the closure of the Strait of Hormuz, developments in Taiwan can have repercussions on U.S. consumers quickly. Semiconductors produced in Taiwan are used in phones, laptops, vehicles, and countless other products Americans use regularly.

If tensions with China disrupt production or shipping, companies could face shortages that drive up costs and slow manufacturing. Consumers already saw a preview of this during recent supply chain disruptions, when limited chip availability contributed to higher car prices and inventory shortages.

Americans are already dealing with ongoing inflation concerns, higher borrowing costs, and rising fuel prices, leaving little room for new economic pressures. Any disruptions to Taiwan’s chip production, whether from military pressure from China or new diplomatic policies that treat the island as a ‘bargaining chip,’ could add even more fuel to the economic tensions at home.