Trump's request for Taiwan to pay for its defense is 'likely serious': analyst

Former President Donald Trump’s recent suggestion that Taiwan should share the cost of its defense with the United States is “likely serious,” according to Jefferies analysts.

Trump's approach aligns with his business-like management style, where he seeks to generate new revenue streams, as seen with import tariffs during his presidency. “Trump implies Taiwan should pay the US a protection fee (by sharing the defense cost),” Jefferies analysts noted.

Jefferies believes that Trump’s proposal is not merely rhetorical. “We believe Trump is serious since his style is to run the US like a company,” the analysts stated.

They added that Trump aims to be perceived as generating “billions and billions” of new revenue for the country. This approach underscores his perspective that allies benefiting from U.S. military protection should contribute financially.

Moreover, Jefferies suggests that Trump's stance may be influenced by his perception of U.S. military capabilities regarding Taiwan.

“We also think Trump does not believe the US has the military capabilities to protect Taiwan from China in case of an all-out war,” Jefferies noted. This belief could be driving Trump’s focus on pressuring Taiwan to share the U.S. military costs in the Asia Pacific region.

Despite this, Jefferies maintains that there is no increased likelihood of a cross-strait conflict. “We do not see any change in the (low) likelihood of a cross-strait war,” they emphasized.

In the broader context, Jefferies’ note discusses the implications of U.S. foreign direct product rules (FDPR) and their potential impacts on semiconductor equipment exports, highlighting the complexities and geopolitical nuances influencing the tech sector. However, regarding Trump’s comments on Taiwan, the primary takeaway is the seriousness with which these statements are likely intended and their potential implications for U.S.-Taiwan relations and defense financing.