Decoding U.S. Indo-Pacific Policy: Navigating China’s Rise, Taiwan’s Role, and Trump’s Transactional Vision

Category: Big Picture Perspectives | Sub-category: Hidden Connections

The United States’ Indo-Pacific policy is a high-stakes chess game, shaped by the escalating rivalry with China, the critical role of Taiwan, and the unpredictable contours of Donald Trump’s foreign policy in his second term. As the Indo-Pacific region emerges as the epicenter of global economic and strategic competition, the U.S. seeks to counter China’s influence while strengthening alliances and securing supply chains. Yet, Trump’s “America First” approach—marked by transactional diplomacy and skepticism of multilateral frameworks—introduces uncertainty into this delicate balance. This blog post explores the hidden connections driving U.S. Indo-Pacific strategy, its implications for EU-Taiwan relations, and the broader geopolitical landscape.

The Core of U.S. Indo-Pacific Policy

The U.S. Indo-Pacific strategy, formalized under the 2017 National Security Strategy and refined through subsequent administrations, aims to maintain a “free and open” region. This translates to countering China’s growing assertiveness, securing maritime trade routes, and reinforcing alliances with partners like Japan, South Korea, Australia, and India through frameworks like the Quad. The policy prioritizes economic resilience, particularly in semiconductors, where Taiwan dominates with over 60% of global production. In 2024, U.S.-Taiwan trade hit $140 billion, underscoring Taiwan’s role as a linchpin in tech supply chains.

The Biden administration emphasized multilateral engagement, boosting initiatives like the Indo-Pacific Economic Framework (IPEF) to counter China’s Belt and Road Initiative. It also deepened security ties, with $8 billion in arms sales to Taiwan in 2024 and joint naval exercises with allies in the South China Sea. However, the strategy avoided direct confrontation with China, maintaining “strategic ambiguity” on whether the U.S. would militarily defend Taiwan in a conflict.

Trump’s Return: A Transactional Pivot

Donald Trump’s second presidency, beginning in 2025, is reshaping this approach. His first term saw robust support for Taiwan—$18 billion in arms sales, including F-16 jets, and high-profile visits under the Taiwan Travel Act—but it was tempered by a transactional mindset. Trump’s 2024 campaign rhetoric suggested Taiwan should “pay” for U.S. protection, likening it to an insurance policy, and proposed tariffs of 10–20% on Taiwanese chips to boost domestic production. He also floated extreme tariffs (150–200%) on China if it moved against Taiwan, though he remained vague on military commitments.

This transactional approach introduces volatility. Trump’s focus on economic deals could see Taiwan used as a bargaining chip in negotiations with China’s Xi Jinping, especially if Beijing offers trade concessions. His skepticism of alliances like NATO raises questions about the reliability of U.S. commitments to Indo-Pacific partners. For instance, Trump’s push for allies to increase defense spending—potentially demanding Taiwan raise its 2.5% GDP defense budget to 10%—could strain relations and divert resources from economic resilience.

Taiwan: The Geopolitical Flashpoint

Taiwan sits at the heart of U.S. Indo-Pacific policy, both as a democratic ally and a technological powerhouse. China’s intensifying pressure—daily cyberattacks, military drills near Taiwan’s outlying islands, and economic coercion—has made the Taiwan Strait a potential flashpoint. In 2024, China conducted blockade-style exercises, simulating a response to Taiwan’s growing international ties. The U.S. responded with increased arms sales and congressional resolutions affirming Taiwan’s right to self-defense.

Trump’s policies could either bolster or undermine Taiwan’s position. His tariff threats risk alienating Taipei, which relies on U.S. markets, while his deal-making with China could weaken deterrence. However, his administration’s focus on domestic chip production, spurred by the CHIPS Act, aligns with efforts to reduce reliance on Taiwan—potentially diminishing its strategic leverage. The EU, heavily dependent on Taiwanese semiconductors, watches these shifts closely, as U.S. tariffs or a Taiwan crisis could disrupt its supply chains.

Hidden Connections to EU-Taiwan Relations

The U.S. Indo-Pacific policy intersects with EU-Taiwan relations in subtle but significant ways. First, the EU’s €73 billion trade relationship with Taiwan, driven by semiconductors, aligns with U.S. efforts to secure supply chains. The EU’s push for “strategic autonomy” in technology mirrors U.S. goals under the CHIPS Act, creating opportunities for cooperation. For example, TSMC’s planned chip plant in Germany, announced in 2024, reflects shared U.S.-EU interests in diversifying semiconductor production.

Second, Trump’s unpredictability could push the EU toward a more autonomous stance. If the U.S. wavers on Taiwan’s defense or imposes tariffs that disrupt chip supplies, the EU may deepen trade and investment ties with Taiwan, potentially through a bilateral agreement. The EU’s 2024 resolutions condemning China’s actions in the Taiwan Strait signal growing alignment with U.S. concerns, but Trump’s potential retreat from multilateral frameworks like the Quad could leave Europe to fill the gap.

Third, China’s gray zone tactics—cyberattacks, disinformation, and maritime incursions—challenge both U.S. and EU interests. The EU’s Indo-Pacific Strategy, updated in 2024, emphasizes maritime security and digital resilience, areas where U.S.-EU cooperation could counter China’s moves. However, Trump’s focus on bilateral deals over alliances risks fragmenting this response, forcing the EU to navigate PRC pressure independently.

Challenges and Opportunities

The U.S. Indo-Pacific policy faces several challenges. China’s economic influence, with $600 billion in U.S. trade in 2024, complicates efforts to isolate Beijing. The PRC’s military modernization, including hypersonic missiles and a growing navy, narrows the U.S. advantage in the region. Meanwhile, allies like Japan and Australia expect consistent U.S. leadership, which Trump’s isolationist leanings could undermine.

For the EU, U.S. policy shifts create both risks and opportunities. A more autonomous EU approach to Taiwan—through trade, tech partnerships, or diplomatic support—could strengthen its global standing. However, it risks PRC retaliation, as seen in China’s 2021 trade curbs on Lithuania. The EU must also contend with Trump’s tariffs, which could raise costs for European industries reliant on Taiwanese chips.

Looking Forward: A Fragile Balance

The U.S. Indo-Pacific policy under Trump will likely blend aggressive posturing with pragmatic deal-making, creating uncertainty for Taiwan and the EU. Strengthening alliances, securing supply chains, and countering China’s gray zone tactics remain critical, but Trump’s transactional lens may prioritize short-term gains over long-term stability. The EU, caught between U.S. unpredictability and PRC pressure, must tread carefully, deepening ties with Taiwan while avoiding escalation.

For Taiwan, bolstering self-reliance—through its $19.74 billion 2025 defense budget and diversified partnerships—will be key. The U.S. and EU share an interest in Taiwan’s resilience, but their approaches may diverge under Trump’s leadership. The hidden connections between these dynamics reveal a broader truth: the Indo-Pacific’s future hinges on navigating competing powers, technologies, and values in an increasingly volatile world.

Thought Questions:

1. How might Trump’s transactional approach to Taiwan affect the broader U.S. Indo-Pacific strategy, particularly in maintaining alliances?

2. Could the EU leverage U.S.-China tensions to strengthen its own role in the Indo-Pacific, or will it remain a secondary player?

3. What steps can the U.S. and EU take to counter China’s gray zone tactics without escalating into open conflict?