Investment, defense budget rise planned

GOOD MOVE:
Trump looks for allies who are able to manage their own defense with little reliance on the US, and the capability to trade and invest on ‘fair’ terms, academics said

President William Lai’s (賴清德) plan to further encourage Taiwanese businesses to invest in the US and increase the country’s defense budget is a good move after US President Donald Trump outlined his plan to impose tariffs on other countries, academics said.

After Trump on Thursday announced plans to impose reciprocal tariffs on exports from countries that he said have unfair trade policies toward the US, Lai held a national security meeting and laid out a plan to expand Taiwanese investment in the US and increase defense spending to 3 percent of GDP this year.

For the fiscal year 2025, the Cabinet had previously earmarked NT$647 billion (US$19.74 billion) for national defense, accounting for 2.45 percent of GDP.

Photo: CNA

“President Lai has the right idea in terms of how to manage his relationship with President Trump,” Hofstra University law professor Julian Ku (古舉倫) said.

Trump looks for allies with two key traits — the ability to manage defense with as little reliance on the US as possible, and the capacity to invest and trade with the US on terms that Trump feels are “fair,” he said.

“Lai’s goal should be to get Trump to think of Taiwan in a way that is similar to the way he currently thinks about Japan,” Ku said, adding that Lai’s proposals address both concerns that Trump is likely to raise.

However, Lai needs to deliver something tangible, given his administration cannot force Taiwanese companies to invest in the US and does not control the defense budget, which must be approved by the legislature, Ku said.

“A commitment to dramatically increase Taiwan purchases of US energy, including [liquefied natural gas] LNG, would demonstrate goodwill and get headlines,” he said, adding that such a move would show to the US that Lai has the power to offer tangible benefits that are easy to explain and understand.

Japanese Prime Minister Shigeru Ishiba met Trump for the first time on Friday last week, showing goodwill by committing to substantial investments in the US and making additional LNG purchases, which some analysts viewed as a successful diplomatic move.

Ku the following day wrote on X that Taipei should follow suit by buying as much US LNG as possible and suggested that it could be a way for the government to remind Trump that the nation would not be able to pay for the LNG if China blockades Taiwan.

Washington-based think tank Brookings Institution nonresident senior fellow Richard Bush called Lai’s plan “good will initiatives,” but said he was uncertain how the Trump administration would respond to them.

“More importantly, I suspect that, like the first Trump administration, this one does not have a coherent approach to Taiwan policy, at least as yet,” he said. “I personally believe that for the United States to make public complaints about the policies of a good friend like Taiwan is not necessarily conducive to effective bilateral cooperation based on shared interests.”