Taiwan Cuts Its Defense Budget Just as Trump Hands Xi an Opening

Taiwan’s legislature spent months blocking, gutting, and fighting over a defense spending plan meant to counter Communist China’s military buildup — one of the most aggressive in modern history.When it finally passed a deal earlier in May, at barely half the amount President Lai Ching-te had demanded, President Trump was wheels-up for Beijing, where President Xi Jinping wasted no time telling him that Taiwan is the single issue that could bring the two superpowers to open conflict. The timing could hardly have been worse.So why, with Chinese warplanes circling the island in record numbers and a superpower summit looming, did Taiwan’s own lawmakers spend the better part of a year fighting each other over whether to fund their own defense?A year of legislative paralysisOn November 26, 2025, Mr. Lai’s executive branch unveiled a proposed 1.25 trillion New Taiwan dollar supplemental defense budget.Positioned at roughly $40 billion, the supplemental was designed to run over eight years alongside the regular annual military budget, covering arms purchases from the United States, joint development programs, and the construction of the T-Dome multilayered air defense network, all oriented toward building asymmetric, drone-heavy combat capacity.It was the most ambitious military investment Taiwan had proposed in a generation. Then the opposition got to work killing it.President Lai Ching-te’s Democratic Progressive Party, which backs formal Taiwanese sovereignty, found itself outmaneuvered in the legislature.The Kuomintang, known as the KMT, and its ally, the Taiwan People’s Party, which together control the legislature, had already passed sweeping cuts to the executive branch’s regular budget in 2025, scrapping close to one-third of total operational government spending, including defense. It was the largest budget cut series in Taiwan’s history.This resistance to defense spending is not simply a matter of dollars. The reasons for KMT opposition run a wide spectrum: from genuine concerns about wasteful spending, to partisan gamesmanship, to direct Chinese Communist Party influence on particular KMT members. The timeline is telling: the constitutional power grab that preceded the budget cuts was launched just one month after KMT chief whip Fu Kun-chi led a 25-member delegation to Beijing to meet with Wang Huning, Xi Jinping’s ideologue-in-chief and the official responsible for Taiwan policy. Upon returning to Taipei, Mr. Fu moved swiftly to expand legislative powers, push to soften anti-infiltration laws, and replace references to “China” in the legislature with “the mainland.” Fu is not an obscure backbencher. Nicknamed “the King of Hualien,” he has emerged as the KMT’s most powerful figure and, according to analysts, the most important person in Beijing’s courtship of the party. The Beijing visit was itself the subject of proposed legislation, after seventeen KMT lawmakers traveled to China to meet with CCP officials without notifying any executive branch officials — a move critics said directly undermined Taiwan’s foreign policy. More recently, KMT chairperson Cheng Li-wun traveled to Beijing for a summit with Xi Jinping himself, the first leader-level meeting between the two parties in a decade, a trip that critics argue reflects a deeper pathology within Taiwan’s opposition: a preference for symbolic engagement with Beijing over the hard work of building Taiwan’s own defenses.The Taiwan People’s Party, meanwhile, argued that the proposal required excessive debt financing and would crowd out social welfare and education spending. Both parties favor closer ties with Beijing, another significant reason for opposing defense buildup. This posture that has drawn sharp criticism from Washington hawks, with Republican Senator Dan Sullivan warning publicly that shortchanging Taiwan’s defense to kowtow to the CCP is “playing with fire.”The special defense budget was meant to be the workaround. Under Taiwan’s constitution, special budgets fall outside the regular annual budget process, designated for extraordinary needs and harder to quietly gut through line-item cuts. Mr. Lai’s calculation was that the KMT, having already absorbed political blowback for slashing routine spending, would find it far more difficult to block a measure framed explicitly around national survival. It was a political trap as much as a fiscal instrument — vote against it, and own the consequences.It met the same fate as previous efforts, voted down over and over again, as Chinese military aircraft shattered records by circling the island: 5,709 sorties into Taiwan’s Air Defense Identification Zone were logged in 2025 alone, up from just 380 five years earlier, according to Taiwan’s National Security Bureau.Since December 2, the two opposition parties have blocked the bill at least eight times. KMT caucus leader Fu Kun-chi said Mr. Lai was asking the people of Taiwan “for a blanket authorization without any knowledge of the situation.” The Taiwan People’s Party criticized the proposal as “opaque,” arguing that amid well-documented delays in delivery of already-ordered United States weapons, including howitzers and fighter jets running years behind schedule, it was unreasonable to back new spending on a plan that did not clearly specify what was being purchased.Opposition figures among them KMT caucus whip Fu Kun-chi and caucus secretary-general Lo Chih-chiang demanded that Mr. Lai appear in person before the legislature to brief lawmakers and answer questions directly — positioning it as basic accountability for Taiwan’s largest-ever defense expenditure.Mr. Lai refused, and the standoff became a constitutional dispute in its own right. Taiwan’s Premier cited a 2024 Constitutional Court ruling that struck down opposition-backed legislation that would have given lawmakers the power to question the president, calling the demand unconstitutional. Mr. Lai said he was willing to brief the legislature but would not submit to floor questioning, arguing it would violate the separation of powers. The ruling Democratic Progressive Party dismissed the entire episode as political theater — a pretext, as one DPP lawmaker put it, to “help China block Taiwan from increasing its defense budget.”It was not the first time Taiwan had gone down this road. More than two decades ago, then-President Chen Shui-bian sought to push through a landmark arms purchase from the United States while the KMT controlled the legislature. The opposition blocked and delayed the plan for years, and the Bush administration eventually scaled the deal down dramatically. Analysts say the experience looms large in Mr. Lai’s memory, and the stakes today are considerably higher.Not everyone, however, sees the budget battle in these purely obstructionist terms.“It is worth remembering that Taiwan’s annual defense budget has been steadily increasing for the last decade and Taiwan’s overall defense spending has doubled in that time,” Senior Fellow of International Studies at Nanyang Technological University in Singapore, Drew Thompson, tells The New York Sun.“The recent special defense budget was a supplement to annual defense spending, so the reduction from $40 to $25 billion is significant, but it is still a top-up to existing spending, not an overall reduction.”A compromised budget at a critical momentOn May 8, Taiwan’s legislature finally passed a $25 billion supplement to the island’s annual defense budget, ending months of debate. The spending bill, which runs from 2026 to 2033, was passed unanimously by the opposition after all government representatives abstained from voting because of its smaller size than Lai’s original proposal.What got cut matters as much as what passed. The approved budget lacks funding for Taiwan’s domestic weapons development, the T-Dome missile defense network, and joint United States-Taiwan manufacturing. While funding for United States weapons purchases was preserved, several domestic military projects, including drone programs, were cut.Roughly $11 billion will go toward HIMARS rocket systems, Javelin anti-tank missiles, howitzers, and loitering munitions from a package announced by the Trump administration in December 2025. The remainder is expected to cover medium- and low-altitude air defense systems and replenishing anti-armor stockpiles — provided Washington moves forward with the sales at all.That last question hung over the entire exercise. The Trump administration reportedly stalled approval of the remaining $14 billion arms package in advance of Mr. Trump’s meeting with Mr. Xi. A bipartisan group of senators, including Jeanne Shaheen and Thom Tillis, wrote to Mr. Trump ahead of the summit urging him to “formally notify the $14 billion in United States arms sales to Taiwan that Congress pre-approved in January 2025,” arguing that conflict “can and must be prevented” and that partners in Taipei were stepping up to meet the challenge.Mr. Thompson says the cuts carry real opportunity costs, but that the gaps are not insurmountable.“The Ministry of Defense can and should include key line items for indigenous defense industries, particularly unmanned systems, in the annual budget rather than an ad hoc special budget,” he explains. “The asymmetric capabilities dropped from the special budget are already partially funded in annual budgets, and the gaps can be closed by increased spending allocated in future annual budgets.”Trump, Xi, and an unanswered questionAs Mr. Trump traveled to Beijing for his first state visit to China since 2017, Taiwan watched nervously from afar. Some current and former United States officials and analysts questioned whether transactional Trump could offer Xi concessions on Taiwan — especially if he were seeking Beijing’s help negotiating an end to the Iran war.A former senior United States government official described the worst-case scenario: a concession “could amount to something like criticizing Taiwan, criticizing the president of Taiwan, or agreeing implicitly not to move forward with the next planned major arms sales package” — and that alone “would send a huge message to Taipei.”Mr. Trump’s own words before departure did little to ease the anxiety. When asked about Washington’s longstanding support for Taiwan’s defense, the United States President said, “I’m going to have that discussion with President Xi. President Xi would like us not to, and I’ll have that discussion.” He had previously described the pending $14 billion arms package as “a very good bargaining chip with China.”Inside the Beijing summit, Mr. Xi moved quickly to frame Taiwan in existential terms. According to a Chinese state media readout — notably absent from the White House’s own account of the meeting — Mr. Xi told Mr. Trump: “If it is handled properly, the bilateral relationship will enjoy overall stability. Otherwise, the two countries will have clashes and even conflicts, putting the entire relationship in great jeopardy.”After two days of talks, Mr. Trump said he was unsure whether he would greenlight the planned $14 billion weapons package for Taiwan, following discussions on arms sales in “great detail” with Mr. Xi.“The last thing we need right now is a war that’s 9,500 miles away,” Mr. Trump told reporters on Air Force One, remarks he made in the same breath as discussing the pending arms package. When asked directly by Mr. Xi whether the United States would defend Taiwan if attacked, Mr. Trump told reporters he had responded: “I don’t talk about that.”Secretary of State Marco Rubio moved to reassure allies, saying the United States policy on Taiwan was “unchanged” following the summit, while also noting that arms sales to the island “did not feature prominently” in Thursday’s discussion.The summit ended without any significant tangible breakthrough, with underlying differences over Taiwan, trade, and Iran all unresolved. Whether the administration will finally approve the pending $14 billion arms package and whether Congress will fund presidential drawdown authority and the Taiwan Security Cooperation Initiative now rank among the most consequential open questions in Indo-Pacific security.Back in Taipei, the political damage from months of legislative gridlock is harder to undo. A defense budget slashed by a third, indigenous missile programs left unfunded, and a missile defense network still on paper — all against the backdrop of a superpower summit where Taiwan had no seat at the table.Mr. Thompson says the summit’s outcome did not fundamentally alter the cross-strait military balance but drew a sharp line on Mr. Trump’s rhetoric.“President Trump’s statements about Taiwan arms sales serving as leverage with China are inappropriate and foolish,” he says. “It is vitally important for notifications to happen in a timely fashion to ensure deterrence is sustained in the future.”The stakes, others argue, could not be higher.“I fear the transactional nature of Trump, as though you can treat Taiwan as a bargaining chip with President Xi of China,” defense analyst John Wood tells the Sun. “If we lose Taiwan, which is the goal of the PLA in 2027, it will be a catastrophic strategic loss. This is not a game; it is reality.”

Taiwan Cuts Its Defense Budget Just as Trump Hands Xi an Opening

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