Trump Calls for Taiwan to Pay for U.S. Defence Support

Donald Trump suggested that Taiwan should financially compensate the United States for its defense, likening the U.S. to an insurance company. The comments led to a drop in TSMC's shares. Taiwan, lacking a formal defense agreement with the U.S., has been spending billions on new factories and has a backlog of U.S. arms deliveries.

U.S. Republican presidential candidate Donald Trump has called for Taiwan to compensate the United States for its defense support, likening the U.S. to an insurance company. His comments caused a noticeable decline in shares of Taiwanese chipmaker TSMC on Wednesday.

In an interview with Bloomberg Businessweek, Trump acknowledged his respect for the Taiwanese people but criticized them for taking nearly 100% of the U.S. chip business. He reiterated that Taiwan should pay for its defense. Currently, the U.S. provides Taiwan with defensive means by law but lacks a formal defense agreement.

The U.S., Taiwan's main international supporter and arms supplier, has caused tensions with China over comments by U.S. President Joe Biden, suggesting a possible defense of Taiwan in case of an attack. There has been no immediate response from Taiwan's government or TSMC, which is in its quiet period ahead of its quarterly earnings report.

Shares in TSMC, a leading global chipmaker and supplier to major companies like Apple and Nvidia, dropped over 2% after Trump's comments. The broader market saw a decline of about 0.4%. While TSMC is investing heavily in new overseas factories, most of its manufacturing will continue in Taiwan. The island nation also awaits around $19 billion worth of delayed U.S. arms deliveries.

Delays in weapon supplies, such as Stinger anti-aircraft missiles, have frustrated Taiwan as the U.S. focuses on arming Ukraine. The U.S. Congress recently passed a large foreign aid package, including military support for Taiwan.