Series of Global Upheavals Brings New State to Cold War

The world has recently experienced some major events, including the assassination attempt on Donald Trump, Joe Biden’s withdrawal from the election and China’s facilitation of a reconciliation among Palestinian groups and its support of a Palestinian state. Ukrainian President Volodymyr Zelenskyy softened his stance and is willing to discuss peace, and while Israeli Prime Minister Benjamin Netanyahu visited the U.S. to negotiate a cease-fire, conflicts in Lebanon with Hezbollah have increased.

All of this has several important implications. First, the world order Biden created will collapse, and the world will no longer seek multilateral alliances. Second, America’s attitude will force Ukraine and Israel to face reality. Third, China’s international standing has increased. Finally, black swan and gray rhino events continue to appear, adding more tension to international situations. No matter who becomes the U.S. president, it will not be good for Taiwan. Trump very probably will sell Taiwan out, and Kamala Harris lacks diplomatic experience and may be unable to deal with the complicated international situation.

The status quo in the Taiwan Strait has already changed. While the U.S. and China have already assumed the worst, Taiwan remains stuck on the best-case scenario— the dream of maintaining the status quo. Actually, we don’t need to wait until the U.S. election at the end of the year; we can already speculate about future scenarios based on military, economic and technological aspects.

First, regarding the military aspect, China will increase its countermeasures against Taiwan independence, boosting efforts to encircle Taiwan and seize its right to self-governance. Although Trump is unwilling to show his cards, they are clear: The U.S., only deterring China, will be unwilling to send troops. For the U.S. to send troops, Taiwan must first sustain a period of fighting by itself while the U.S. supplies weapons and assistance from beyond the battlefield. Trump understands that only without fighting a war can America be great again!

Taiwan’s hand is not difficult to predict: Even if the military budget increases greatly, we are unwilling and unable to fight a war. In this situation, it will be a game of chicken between the U.S. and China, although China is prepared for an accidental spark that ignites a war. So-called asymmetric warfare is meaningless. War will not happen; instead, it will be a confrontation between two great powers.

Second, regarding economics, Trump has said that all imports will be subject to a 10% tariff, and Chinese imports will be subject to as much as a 60% tariff. According to estimates by UBS, this will severely harm Chinese economic growth, causing it to fall from 5% to 2.5%. However, China is not so easily dealt with. Currently, Chinese goods, especially electric vehicles, are sold worldwide. The world needs Chinese goods, and the U.S. may wind up hurting itself instead.

Trump’s major policy is to implement tax cuts, which will cost around $4.5 trillion. Over the next 10 years, however, tariffs might bring in nearly $3 trillion. In addition, Trump will cut nearly $1 trillion in expenditures from the Biden administration’s Inflation Reduction Act. What economists did not anticipate, however, is that Trump will also charge countries, including Taiwan, for U.S. protection, which might amount to hundreds of billions of dollars.

Even if China acts against Taiwan, the effect of U.S. sanctions on China will be limited. The rest of the world won’t abandon the Chinese market. China’s economy is already in poor shape. Stock and real estate markets are falling, and domestic demand is sluggish. Even if it gets worse, it won’t get that much worse. Conversely, if China blockades Taiwan, the global economic loss will be as high as $10 trillion. Who will be hurt more?

As for technology, China’s weakness is semiconductors, to which Taiwan is key. Chips have already overtaken oil as the weapon of the future, and thus, Taiwan is the world’s largest weapons supplier. Trump, of course, will not tolerate Taiwan’s hold on America’s lifeline and will make gradual adjustments. The U.S. is a global technological hegemon and can order around whomever it wants. In the past, it pressured Taiwan only through policies, but it might begin pressuring the Taiwan Semiconductor Manufacturing Company in the future.

China is a major global chip market, and its attitude is clear: It will not allow the U.S. to monopolize the high end of the value chain forever, leaving China on the low end. The U.S. knows China will eventually catch up, and the most it can do is to slow down China and maintain its hegemony while thinking of ways to control Taiwan. If one side wants to take everything for itself, a war would erupt that would hurt both sides. Instead, each side will take what it needs, even if they maintain a “small yard, high fence” approach.

As global situations change, strength is king. War will eventually subside, and the two sides of the strait will move toward integration, just like East and West Germany and North and South Vietnam. For the world to recognize One-China, it will be difficult for Taiwan to exist as a country for long. China and the U.S. will eventually come to a consensus.

In the future, the world will enter a new Cold War and unrestricted warfare in which the weapons are no longer nuclear. In the continually adjusting dynamic balance of games between great powers, Taiwan will face all new challenges!

The author is vice chairman of the K.T.Li Foundation for Development of Science and Technology and the cofounder of the Southeast-Asia Impact Alliance.