After months of political limbo, the legislature passed May 8 the KMT-TPP version of the special defense budget worth NT$780 billion (US$24 billion) — down from the NT$1.25 trillion initially proposed by the government.
The bill runs until 2033 and has two main funding provisions: up to a maximum of NT$300 billion for arms sales already approved by the US in December 2025, and a further budget capped at NT$480 billion for an additional arms package expected from Washington. Both provisions remain contingent on legislative review once Taiwan receives Letters of Offer and Acceptance (LOA) for specific weapons systems.
The news is positive, as it finally allows Taiwan to advance its military build-up by using the budget to pay for High Mobility Artillery Rocket System, or HIMARS, rocket artillery systems, Javelin anti-tank missiles, and Altius loitering munition drones. However, the drastic cuts compared to the Cabinet's original proposal carry significant risks for the future of Taiwan's defense architecture.
The government proposed seven interconnected defense projects in its initial special defense budget, but the exclusion of several reshapes how Taiwan can approach its defense strategy in the near and medium term. Notably, the indigenous drone industry and the T-Dome project have been heavily impacted.
Amid growing tensions in the Taiwan Strait, the passed budget carries serious risks. It signals to China how effective spreading political polarization works, sends mixed signals to the US, and, above all, weakens Taiwan's defense capabilities.
Asymmetric capabilities threatened
The drastic reduction to the special defense budget threatens several dimensions of Taiwan's defense capabilities.
The indigenous military industry has been cut off from critical funding, deeply impacting the asymmetric warfare strategy and its defense autonomy. Notably, the Cabinet’s budget included approximately 200,000 drones procured from domestic manufacturers, but the units have been cut from the budget.
Additionally, shifting drone spending into the regular budget, as some KMT legislators have suggested, means that these programs will not be funded or ordered until 2027 at the earliest, dangerously delaying Taiwan's military preparedness. This is especially risky as Taiwan's drone production is already ill-suited for the scale of what a potential war in the strait would necessitate.
The drone industry is central to Taiwan’s porcupine strategy and for raising the cost of an invasion to an unsustainable level. Directly targeting it is strategically irresponsible.
Beyond UAVs, the defense autonomy is also weakened as the plans for creating the T-Dome, Taiwan’s integrated air-and-missile defense system, will need to be recalibrated and rethought. This would be hard to achieve given the fact that time is a precious resource in Taiwan’s race for military preparedness.
Delicate situation
Mass production of the Strong Bow, Taiwan’s anti-ballistic missile at the core of the T-Dome, was also supposed to be funded by the special defense budget, alongside domestic production of ammunition for armored vehicles and artillery.
Taken together, these cuts are a serious blow to Taiwan’s indigenous capabilities and undermine Taiwan’s capacity to sustain and expand its military strengths beyond arms sales from the US. As the special defense budget solely allows for purchasing arms from Washington, were the Trump administration to halt any arms sales in the future, Taiwan would be in a very delicate situation.
Ultimately, this will also weaken the non-red supply chain strategy, undermining Taiwan's diplomatic efforts to create broader engagement with like-minded countries. Without a strong drone national industry that allows for mass production, supplying both the ROC army’s needs and European countries becomes impossible.
By invoking the specter of potential corruption related to using the special budget for domestic purchases and thus opposing the government’s plan, the KMT casts doubts on the future levels of drone procurement. It also risks discouraging massive investments in the drone industry, ultimately hurting Taiwan both economically and militarily.
Nonetheless, the Cabinet and the Ministry of National Defense should have been more transparent regarding how the special budget would have been employed for purchasing indigenous arms. This would have avoided some miscommunication and made the whole process more transparent.
Politically, the budget also exposed internal divisions within the KMT. Some lawmakers backed a NT$800 billion plan, while another version worth NT$380 billion, plus future LOAs from the US, was notably supported by KMT Chair Cheng Li-wen (鄭麗文).
Despite Cheng claiming that this approach would support Taiwan's domestic drone industry, the impact of the passed special defense budget risks proving to be entirely different.
A step forward
Ultimately, these cuts impact not only military calculus, but also economic partnership and diplomatic engagement.
Yet, even though drones were not funded, it remains important to highlight that despite political polarization, the Legislature has passed a historically large special defense budget. While focusing on the purchase of US weapons could be seen as a political strategy to avoid angering Washington, the result is that Taiwan’s military capabilities will be reinforced.
Could the remaining portions of the original proposal be funded by other means? A possibility would be to resubmit to the Legislative Yuan previous items removed from the special defense budget but it is very unlikely that the legislature will greenlight items it just excluded.
The defunding of drones should not be forgotten, as it creates a severe gap in Taiwan’s defense architecture and indigenous weaponry.
Even so, after months of negotiations, it is now time to promote cross-party cooperation for the sake of national security.
Further cuts or delays only serve China by undermining Taiwan’s readiness and eroding Washington’s confidence in Taiwan. China is still playing the long-term game, even though with little success in its ability to attract Taiwan.
Taiwan cannot afford to pause its defense readiness.
The path forward requires assessing security priorities clearly, deepening cross-party cooperation, and rebuilding trust between the legislature and the executive. Demanding transparency and accountability from the government is a legitimate function of the legislature — but it must not, directly or indirectly, produce outcomes that serve China's interests.
A critical point of tension has been partially resolved. What is needed now is not further division, but the national unity that the nation’s security requires.
