As US-China Discuss New World Order, What Deterrence Can a Hollowed-Out Taiwan Find?

At his year-end press conference last week, U.S. Secretary of State Marco Rubio stated that China is “a rich and powerful country and a factor in geopolitics,” and the job of the State Department “is to find opportunities to work together” with the Chinese Communist Party and the Chinese government. When he was a senator, Rubio was sanctioned twice by the CCP. He has admitted his shift in stance, since his role now is to represent President Donald Trump and his job to represent the U.S. internationally. As Trump has repeatedly raised the concept of a new “G2” U.S.-China order, Rubio is striving to cooperate with the CCP. He has even gone so far as to refuse to pick sides between Japan and the CCP, believing that a U.S.-Japan alliance and U.S.-China cooperation are not mutually exclusive.

In January 2025, before leaving office, Antony Blinken, the secretary of state for the Biden administration, warned that China posed a “systemic challenge” to the global order. After the Trump administration took over, under “America First,” America’s attitude has shifted significantly. Rubio, who is both the secretary of state and the national security advisor, talks of friendliness and cooperation whenever he speaks of working with Beijing. The U.S. has already changed its tone in dealing with Beijing, and Japanese Prime Minister Sanae Takaichi’s “Taiwan contingency” stance has taken a blow. The core anti-China stance of Lai Ching-te’s administration remains unchanged, however, and Taiwan is fully prepared for war.

President Lai announced a $40 billion military budget, including a record-breaking arms sale from the U.S., and received unprecedented support from the American Institute in Taiwan. At the same time, however, The New York Times obtained the classified “Overmatch Brief” by the Pentagon, which warned that the U.S. cannot protect Taiwan. In most war simulations, the USS Gerald R. Ford is destroyed by the People’s Liberation Army within minutes. Given that U.S. military capabilities in the region might be crushed by the PLA, how much more of a deterrent can the Lai administration create by giving 5% of Taiwan’s gross domestic product to the U.S. for national security?

Over the last year, the Lai administration has pledged at least $445 billion to gain the trust of the Trump administration. This included arms sales, agricultural purchases and Alaskan natural gas development, and might include $400 billion in investments to move the semiconductor ecosystem to the U.S. And what did this all-out effort to secure the U.S. yield? The $20 billion in arms sales remains postponed, tariff negotiations continue with no end in sight, and even Lai doesn’t know when he can visit the U.S. Taiwan continues to write checks without securing contracts. Does this increase resilience or merely drain Taiwan?

Some people commend the U.S. for increasing its support for Taiwan with the “Taiwan Assurance Implementation Act.” Still, no matter how beautifully or strongly the assurances to Taiwan are packaged, they cannot go against “America First” or obstruct the G2 relationship the U.S. and China are building. Previously, the “Taiwan Assurance Act” allowed high-ranking Taiwanese officials to visit Washington, but only to discuss tariffs, procurement and supply-chain relocation. Lai was obstructed from visiting Washington, and high-level U.S.-Taiwan security talks were moved from Washington to Alaska and downgraded. What’s more, demands by the U.S. exceeded those disclosed by the Lai administration.

Secretary of Commerce Howard Lutnick stated that the Trump administration aims to bring the semiconductor supply chain to the U.S. Taiwan will train workers and invest more than $300 billion. Later, he added that TSMC would be allowed to invest more than $200 billion in the U.S. These statements amount to a slap in the face of Taiwanese trade representatives. While officials have said negotiations have reached the final stages, actual monetary amounts and tax rates remain undetermined.

As the list of items to discuss in the U.S.-Taiwan trade negotiations grows, arms sale commitments are basically giving the U.S. a blank check. Although Trump claims that Xi Jinping will not use force during his term as president, Taiwan has prepared its defenses against China and is caught in a dilemma: As the U.S. develops its AI industry, Taiwan has seen a trade surplus from its high-tech industries, for which the government must use procurement and industry relocation to balance out “losses to the U.S.” In addition, military purchases are tied to gross domestic product — the more the economy grows, the more the military spending will be, leading to increased debt. While the country is bleeding money and living off its reserves, officials are lauding this “Taiwanese model.”

As the U.S. is actively developing a new G2 order, the National Security Strategy report avoids mention of the military threat from China, the significant impacts of which are already emerging. Trump’s handling of the “Taiwan contingency” dispute between Japan and China was muted, and he did not counter China and Russia when they conducted joint drills around Japan. His attitude toward U.S.-Japan security and Indo-Pacific strategy is even softer than it was in the past.

Rubio’s words at his year-end press conference reflect not only a personal change in stance but a shift in America’s attitude. As the U.S. pushes G2 diplomacy, the strategic framework in the Indo-Pacific is gradually falling away. That the Lai administration only prepares for war and not for negotiations leaves Taiwan increasingly hollow as it seeks America’s support. With its competitiveness diminishing, what deterrence does it have against China? The $445 billion in tribute has had no deterrent effect, nor has it left any escape route within a new U.S.-China order.