TAIPEI/WASHINGTON — A bipartisan coalition of 37 US lawmakers issued a stark warning to Taiwan’s parliament on Thursday, asserting that the threat from Beijing “has never been greater” and urging the immediate approval of a massive $40 billion supplementary defense budget. The push comes as the two nations signed a landmark trade agreement on Friday aimed at insulating Taiwan’s economy and integrating its semiconductor dominance with American AI ambitions.
The Defense Standoff: $40 Billion vs. Democratic Oversight
The letter, led by Senators Pete Ricketts and Chris Coons, was addressed to Taiwan’s Legislative Speaker Han Kuo-yu and leaders of the opposition Kuomintang (KMT) and Taiwan People’s Party (TPP). It pointed to large-scale People’s Liberation Army (PLA) exercises in late 2025 as evidence of Beijing’s growing preparations for a potential blockade or invasion.
- The Proposal: President Lai Ching-te’s 40billion(NT1.25 trillion) special budget, spanning 2026–2033, aims to build a “T-Dome” multi-layered air defense system and boost asymmetric warfare capabilities.
- The Gridlock: The opposition-led parliament has stalled the bill, citing concerns over fiscal responsibility and a lack of transparency. The TPP has proposed a scaled-back version capped at $12.6 billion.
- The US Stance: Lawmakers warned that while the US is working to clear a massive backlog of weapons deliveries, “Taiwan must step up with us” to ensure its defense progress is not “insufficient.”
A “New Chapter”: The February 13 Trade Deal
While defense spending remains a point of friction, economic ties have reached a historic high. On Friday, February 13, 2026, officials finalized the Agreement on Reciprocal Trade, a deal President Lai described as a “major transformation” for the island’s global standing.
Key Provisions of the Trade Agreement
| Provision | Detail |
| Tariff Reductions | US tariffs on Taiwanese goods capped at 15% (down from 20%), placing Taiwan on equal footing with South Korea and Japan. |
| Energy Security | Taipei commits to purchasing $44.4 billion in US liquefied natural gas (LNG) and crude oil through 2029. |
| High-Tech Integration | Preferential treatment for Taiwanese semiconductors in the US to facilitate a “strategic high-tech partnership” in AI and advanced electronics. |
| Agricultural Access | Taiwan will eliminate or reduce tariffs on 99% of American goods, including beef, dairy, and grain. |
| Investment Pledge | A commitment to channel $250 billion into US production capacity for chips and energy projects. |
Export to Sheets
Geopolitical Implications
The dual-track approach—ramping up military pressure while deepening economic integration—highlights the “rock solid” nature of the US-Taiwan relationship under the current administrations. However, the success of these measures hinges on Taiwan’s domestic politics. The KMT has signaled it will “respond to US expectations” but refuses to compromise on its role in overseeing the budget process.
Meanwhile, the US House recently passed the PROTECT Taiwan Act, which threatens to exclude China from major global financial institutions, such as the G20, should Beijing move to strike or blockade the island.
“The Chinese Communist Party shouldn’t benefit from global systems if it threatens its neighbors,” said Representative Greg Stanton following the bill’s passage.