US launches trade talks with Taiwan as China escalates military pressure

The United States announced Thursday that it would begin formal trade negotiations with Taiwan, a deliberate move to deepen economic ties with the self-governed island that China claims as its own territory. The timing was pointed: the announcement came as Beijing was still conducting military drills that included firing missiles into the sea, a show of force meant to intimidate Taiwan following House Speaker Nancy Pelosi's visit to the island earlier in the month—the highest-level American official visit in 25 years.

Taiwan's military responded with drills of its own that same Thursday. At Hualien Air Base on the island's east coast, personnel practiced defensive scenarios using Taiwanese-made Sky Bow 3 anti-aircraft missiles and 35mm anti-aircraft cannons, simulating responses to a Chinese missile attack. Major Chen Teh-huan, an air force officer, said the military had not panicked at China's show of force. "Our usual training is to be on call 24 hours a day to prepare for missile launches," he said. "We were ready."

The trade talks represent a calculated escalation of American support for Taiwan without crossing into formal diplomatic recognition. The United States has no official relations with Taiwan, though it is the island's ninth-largest trading partner and maintains extensive informal ties. Kurt Campbell, President Biden's coordinator for the Indo-Pacific region, said the talks would "deepen our ties with Taiwan" but stressed that American policy toward China and Taiwan was not changing. The U.S. Trade Representative's office announced that negotiations would be conducted through the American Institute in Taiwan, Washington's unofficial embassy, and would cover agriculture, labor, the environment, digital technology, state-owned enterprises, and what it called "non-market policies."

The economic stakes are real. China takes more than twice as much of Taiwan's exports as the United States does, giving Beijing substantial leverage over the island's economy. Taiwan's government says its companies have invested nearly $200 billion on the mainland, and Beijing claims some 158,000 Taiwanese entrepreneurs and professionals live there. After Pelosi's visit, China retaliated by blocking imports of Taiwanese citrus, fish, and hundreds of other food products—a move that hurt rural areas seen as supporters of President Tsai Ing-wen, though these goods account for less than half a percent of Taiwan's total exports to the mainland. Notably, Beijing did not disrupt the flow of processor chips from Taiwan, which Chinese factories need to assemble smartphones and consumer electronics worldwide. Taiwan is the world's largest chip supplier.

The broader context is one of deepening American-Chinese hostility. Relations between Washington and Beijing are at their lowest level in decades, strained by disputes over trade, security, technology, and China's treatment of Muslim minorities and Hong Kong. The U.S. and China have been locked in a tariff war for three years over many of the same issues now being raised in the Taiwan trade talks: China's support for state-owned companies that dominate its industries, allegations that Beijing steals foreign technology, and complaints that it limits access to markets in violation of its commitments to free trade.

China's government has made clear that it views any official contact between Washington and Taiwan as dangerous provocation. Xi Jinping's administration says such visits might embolden Taiwan to make its decades-old de facto independence permanent—a step Beijing says would lead to war. The government had no immediate public reaction to the trade announcement Thursday, but the military drills themselves were a message. A second group of American lawmakers, led by Senator Ed Markey of Massachusetts, arrived in Taiwan on Sunday and met with President Tsai. Beijing announced a second round of military drills in response.

Washington maintains that it takes no position on the political status of China and Taiwan but wants any dispute between them settled peacefully. Federal law obligates the U.S. government to ensure Taiwan has the means to defend itself. Campbell said during a conference call that Washington would "continue to take calm and resolute steps to uphold peace and stability in the face of Beijing's ongoing efforts to undermine it, and to support Taiwan." The trade talks, then, are one such step—an attempt to reduce China's economic leverage over the island while avoiding direct diplomatic recognition that would provoke Beijing further. Whether they succeed depends partly on whether Beijing sees them as a reasonable accommodation or as another unwelcome intrusion into what it considers its internal affairs.