Trump Criticizes Taiwan Over Defense Payments to the US

U.S. Republican presidential candidate Donald Trump stated that Taiwan should compensate the United States for its defense support. The remarks led to a decline in shares of Taiwanese chip manufacturer TSMC. This comes amid ongoing tensions and legal obligations of the U.S. in supporting Taiwan's self-defense, despite the lack of a formal defense agreement.

U.S. Republican presidential candidate Donald Trump has called for Taiwan to pay the United States for its defense services, claiming the nation gives nothing in return. His comments were made during an interview with Bloomberg Businessweek on June 25 but were only published on Tuesday, prompting shares of Taiwanese chip manufacturer TSMC to drop on Wednesday.

Trump emphasized his respect for the Taiwanese people but argued that they have taken virtually the entire American chip business. He likened the U.S. role to that of an insurance company, suggesting Taiwan owes payment for its defense.

The United States, a key supporter and arms supplier for Taiwan, is legally bound to provide the island nation with means for defense, even though there is no formal defense pact. This stance has been a point of contention, particularly with U.S. President Joe Biden's comments implying potential U.S. intervention if Taiwan were attacked. These comments have angered the Chinese government, deviating from the long-standing U.S. policy of 'strategic ambiguity.'

Since 1979, when the U.S. officially recognized Beijing, there have been no formal diplomatic or military ties between Washington and Taipei. The Taiwanese government and TSMC, currently in a quiet period ahead of its earnings report, have not commented on Trump's remarks. Shares in TSMC, which supplies major tech firms like Apple and Nvidia, fell over 2% in morning trading, while the broader market declined by 0.4%. TSMC is investing heavily in new manufacturing facilities abroad, including a $65 billion project in Arizona, though it maintains that most production will remain in Taiwan.

(With inputs from agencies.)