U.S.-China tensions have eased following the Trump-Xi summit. The two sides extended their trade truce and maintained dialogue, indicating that both countries aim to manage the intensity of their competition and prevent further escalation. However, increased stability between the major powers does not automatically enhance Taiwan’s security. As the United States and China begin to manage their competition, Taiwan must remain vigilant to avoid being treated merely as a pawn within this process.
Daniel Liu, Director of the Regional Development Study Center at the Chung-Hua Institution for Economic Research (CIER), noted that observers often assess the summit by asking whether Trump might use Taiwan as a bargaining chip. However, the primary risk may not take the form of an explicit agreement. To maintain a constructive negotiating environment with Beijing, the United States is more likely to make selective adjustments to the timing of arms sales, high-level interactions, policy statements, and technology controls. While these adjustments do not necessarily signal abandonment of Taiwan, their cumulative effect could erode Taiwan’s sense of security and limit its policy options.
As U.S.-China Competition Stabilizes, Taiwan Should Minimize Vulnerability to External Policy Changes
Xi Jinping reiterated that the “Thucydides Trap Can Be Surmounted,” positioning Taiwan within the broader U.S.-China strategic framework. Beijing aims to communicate to Washington that China’s rise and continued U.S. leadership do not inevitably lead to conflict, provided that the United States respects China’s defined core interests. Consequently, Beijing has characterized Taiwan as more than a cross-Strait issue, framing it as a test of whether the United States and China can avoid confrontation.
Liu argued that this narrative disadvantages Taiwan. Beijing presents U.S. arms sales to Taiwan, official exchanges, and regional military deployments as sources of escalating tensions. Should Washington prioritize broader stability, it may approach its support for Taiwan with increased caution. Taiwan must consistently assert that peace across the Taiwan Strait cannot be achieved by undermining its self-defense. The primary threats to stability are military coercion and unilateral attempts to alter the status quo.
Any reduction in U.S.-China tensions will not resolve the ongoing technology rivalry. Tariffs on general merchandise may decrease, and trade in agricultural products and energy may expand. However, advanced chips, semiconductor equipment, artificial intelligence, and dual-use technologies will continue to face stringent controls. As a result, U.S.-China relations are likely to develop a dual structure characterized by selective economic and trade liberalization alongside persistent technological barriers.
Selective Economic Liberalization Will Persist, While Technology Competition Remains Ongoing
Liu observed that this situation exerts pressure on Taiwan from two directions. Taiwan’s semiconductor capabilities position it as a key U.S. economic security partner, yet the concentration of advanced production capacity within Taiwan is also perceived as a vulnerability. U.S. initiatives to promote domestic production, encourage expanded investment, and diversify supply sources will persist regardless of improved bilateral relations. Taiwan should not regard its strategic position in semiconductors as a permanent safeguard, nor should it permit overseas expansion to result in the ongoing relocation of core research and development, talent, and industrial clusters.
Taiwan must therefore differentiate between “global expansion” and “industrial relocation.” While companies may have valid reasons to move closer to customers and diversify production, the most advanced research and development, critical manufacturing processes, supply chain collaboration, and talent development should remain based in Taiwan.
The government should also implement technology classification, outbound investment screening, and mechanisms to protect core capabilities. These measures would facilitate companies’ global expansion while safeguarding Taiwan’s essential industrial foundation.
Regarding security, Taiwan cannot depend exclusively on U.S. commitments. This temporary easing of tensions should be viewed as an opportunity for preparation. Taiwan should accelerate the development of asymmetric defense capabilities, enhance critical infrastructure protection, and strengthen backup capacity for energy, communications, and essential supplies. Taiwan’s security relies not only on external support but also on its capacity to maintain societal functioning during a crisis.
Diplomatically, Taiwan should institutionalize its international partnerships by deepening cooperation with the United States, Japan, Europe, and Indo-Pacific partners in areas such as economic security, cybersecurity, supply chains, and crisis response. The greater the degree of institutionalization, the less susceptible Taiwan’s policies will be to the outcomes of individual summits, personal relationships, or short-term agreements.
Taiwan Should Use the Period of Easing Tensions to Prepare and Enhance Its Resilience
Liu stated that the primary concern for Taiwan following the Trump-Xi summit is not the emergence of evidence that Taiwan has been “sold out.” Instead, the risk lies in the possibility that the United States and China may gradually develop a model of interaction in which the two major powers set boundaries and manage risks. If Taiwan lacks adequate capabilities and international connections, it may face pressure to exercise restraint as both sides seek stability, even without being explicitly used as a bargaining chip.
Managed competition between the United States and China now constitutes the prevailing reality. Taiwan’s objectives must extend beyond avoiding being traded away; it must also prevent marginalization. By strengthening self-defense, safeguarding core industries, and expanding institutionalized cooperation, Taiwan can transition from being a subject of discussion to becoming an indispensable participant in regional arrangements.
Source: Daniel Liu (September 27, 2026). Taiwan Amid Managed U.S.-China Competition. United Daily News. https://udn.com/news/story/7340/9779291