TAIPEI (Taiwan News) — Taiwan News interviewed representatives from Taiwan’s first international think tank, the Center for Asia-Pacific Resilience and Innovation (CAPRI, 亞太堅韌研究基金會), to talk about the difficult trade-offs that policymakers must make in a new era of global uncertainty.
As Donald Trump begins his second term as US president, Taiwan faces an unpredictable US foreign policy and Chinese pressure across the strait. Meanwhile, Taiwanese society has become more divided on issues such as national and defense spending, economic policy, and nuclear energy.
The policy paper “Anchoring Taiwan’s Future during Trump 2.0: Building Resilience from Within” by researchers Siwei Huang and Caroline Fried presents four recommendations for Taiwan’s long-term survival.
First, Taiwan's policymakers must make strategic, long-term trade-offs rather than reacting to individual policies like Trump's tariffs.
Economic overconcentration
Second, Taiwan's policymakers must identify new economic strategies that can withstand external pressure and enable inclusive growth, both within and outside the ICT sector. The report notes an “overconcentration” in electronics and ICT exports, which account for 65% of exports.
Taiwan makes over 90% of the world’s most advanced chips, but the report said this “overreliance” leads to growing social inequality. The report pointed out that the chip sector generates over 15% of Taiwan’s GDP but employs only 2.8% of the workforce. With high-paying jobs concentrated in technology manufacturing, wages in the service sector, which employs 60% of workers, are stagnating.
Taiwan’s competitive advantage in the global semiconductor supply chain cannot drive its economic growth indefinitely, the researchers noted. As US and Chinese policies are squeezing the industry, Taiwan has to identify additional growth engines, trading partners, and talent pools.
Energy security
Third, Taiwan’s policymakers must diversify energy sources, as economic growth strains energy demand and complicates decarbonization efforts. Taiwan faces monumental challenges in securing a sustainable energy supply, as it relies on imports to meet 97% of its energy needs.
This makes the nation highly vulnerable to supply chain disruptions in the Western Pacific. A Chinese blockade would swiftly cut Taiwan off from its vital energy supply, the report says.
Nuclear energy has been especially divisive, as Taiwan struggles to reach its decarbonization goals. The DPP government has committed to achieving a “nuclear-free homeland” this year, while 88% of the opposition KMT voters support nuclear energy.
However, the report notes that young people increasingly recognize that reaching net-zero emissions by 2050 is impossible without nuclear power. Even supporters of the traditionally anti-nuclear DPP are now split, with 44% supporting and 45% opposing nuclear energy.
National spending
Fourth, Taiwan’s government and the public must engage in meaningful discussions on contentious policy issues to enable effective policymaking. National spending is among the most intensely disputed issues in Taiwan. The lack of compromise and breakdown in negotiations between the DPP and the opposition parties over the 2025 budget is deeply concerning.
The public is divided on whether Taiwan should increase its defense spending. In a recent survey, 49% of voters supported increasing the defense budget while 43% opposed it.
Without national security, Taiwan cannot invest in other areas of society. Young people demand higher wages, green energy, and robust social and healthcare programs. Given limited government resources, balancing short-term needs with their long-term implications will be crucial for Taiwan to avoid polarization and move forward with effective policymaking.
