• Xi Jinping presses Washington to shift from 'does not support' to 'oppose' Taiwan independence.
  • U.S. holds firm on Taiwan Relations Act and defensive arms sales, but a $14 billion package remains on hold.
  • Asian allies fear Taiwan could become a bargaining chip in broader U.S.-China negotiations.

Pressure on Language

Chinese President Xi Jinping is making Taiwan a central issue in high-stakes talks with U.S. President Donald Trump (DJT), pushing Washington to explicitly oppose Taiwan independence and to halt arms sales to the island, according to people familiar with the matter. Beijing's demand goes beyond the longstanding U.S. formulation that it "does not support" Taiwan independence—a nuance that has provided strategic ambiguity for decades.

In a November 2024 meeting with then-President Biden, Xi urged the United States to "unequivocally oppose" Taiwan independence and support peaceful reunification, a call he has repeated in recent months. China views Taiwan as its most sensitive sovereignty issue and regards U.S. arms transfers as a major obstacle to stable bilateral relations.

U.S. Position Unchanged

The U.S. position remains materially different from China's demand. Washington maintains an unofficial relationship with Taiwan, follows its own "one China" policy, says it does not support Taiwan independence, and opposes unilateral changes to the status quo—including by force or coercion. Under the Taiwan Relations Act, the United States is obligated to provide Taiwan with defensive capabilities.

A proposed $14 billion arms package for Taiwan has been placed on hold, after Trump characterized arms sales as a potential negotiating chip. That move has unsettled U.S. allies in Asia, who worry Taiwan could become a bargaining item in broader U.S.-China negotiations over trade, security, and economic relations.

"What institutional investors are really focused on is regulatory stability," said one person familiar with the discussions, speaking on condition of anonymity. "Any hint of weakening deterrence could rattle markets from Tokyo to Singapore."

The distinction in language matters. China's requested wording—"oppose Taiwan independence"—would align Washington more closely with Beijing's position and could be read as U.S. opposition to any Taiwanese move toward formal legal independence. The current U.S. wording leaves Washington opposing unilateral changes to the status quo while avoiding an explicit endorsement of Beijing's sovereignty claim. The U.S. "one China" policy acknowledges Beijing's position that Taiwan is part of China but does not endorse it.

Economic and Market Implications

A Taiwan Strait crisis would carry outsized economic risk because Taiwan is central to advanced semiconductor manufacturing and lies beside critical shipping routes. Even without a conflict, military pressure, sanctions risks, disrupted sea or air traffic, or uncertainty about U.S. security commitments can raise costs for technology producers, insurers, shipping firms, and global manufacturers.

Taiwan is increasing military spending and prioritizing asymmetric capabilities. Its 2026 defense spending is planned at NT$949.5 billion, or 3.32% of GDP—a 22.9% year-on-year increase and the first time above 3% since 2009. A U.S. suspension of major arms sales could ease a near-term point of friction with Beijing, but it could also unsettle Taipei and U.S. regional partners that rely on U.S. deterrence credibility.

The Road Ahead

The immediate test is whether the summit yields any public language, arms-sales delay, or private understanding related to Taiwan. A rhetorical concession by Washington could temporarily reduce diplomatic friction with Beijing but would likely provoke concern in Taipei, Tokyo, and other regional capitals if it appeared to weaken deterrence.

"It's much more of a convergence between the two solutions," said one analyst, referring to the delicate balance between deterrence and diplomacy. "But without clarity, miscalculation becomes more likely."

The core risk is not simply a sudden declaration of independence. It is cumulative miscalculation: stronger Chinese military pressure, more forceful Taiwanese political rhetoric, uncertainty over U.S. arms commitments, and a broader U.S.-China rivalry in which Taiwan becomes a bargaining tool or a trigger for escalation.

Correction: A previous version of this article misstated the year of Taiwan's defense spending target. It is 2026, not 2025.