Overview

The United States continues to approve arms sales to Taiwan under the Taiwan Relations Act and in line with the Six Assurances, providing the island with the means to maintain a sufficient self-defence capability. Recent packages focused on air-defence, radar and sustainment reinforce Taiwan’s ability to respond to the People’s Republic of China’s growing military pressure and grey-zone activities. At the same time, these sales sustain the U.S. defence industrial base and contribute to global supply-chain stability by reducing the risk of a disruptive conflict in the Taiwan Strait.

What Happened

  • In late 2024, the U.S. administration notified Congress of an arms package worth about US$385 million for Taiwan, including spare parts for F-16 fighter jets, radar systems and communications equipment. This was the eighteenth arms-sale case approved under the current U.S. administration.
  • The package followed earlier approvals totalling roughly US$2 billion for air-defence missiles and associated systems, aligning with Taiwan’s strategy to build a distributed, resilient defence rather than rely only on a few high-value platforms.
  • Taiwan’s Ministry of Foreign Affairs welcomed the decisions as evidence of “normalised” arms sales and long-term support for Taiwan’s defence resilience and deterrence posture.

Legal Basis: Taiwan Relations Act and the Six Assurances

  • Taiwan Relations Act (TRA): The TRA commits the United States to provide Taiwan with arms of a defensive character and to maintain the capacity to resist coercion or force that would jeopardise security or the social and economic system of the people on Taiwan.
  • Six Assurances: U.S. policy statements, reaffirmed by successive administrations, clarify that Washington will not set a fixed date for ending arms sales, will not consult Beijing on such sales, and will not pressure Taiwan to negotiate with the PRC.
  • Together, these frameworks provide the legal and political foundation for continued U.S. arms sales, even as Beijing protests and imposes sanctions on U.S. defence contractors.

Strengthening Taiwan’s Air Defence and Grey-Zone Resilience

  • Air-defence depth: F-16 spare parts, active electronically scanned array (AESA) radar support and air-defence munitions boost sortie rates, detection ranges and interception capacity across Taiwan’s air force.
  • Grey-zone response: Better sensors, command-and-control and communications enhance Taiwan’s ability to track and respond to frequent PLA air and maritime incursions, non-kinetic harassment and information operations without escalating unnecessarily.
  • Hardening and redundancy: Sustainment of aircraft, radars and mobile systems contributes to a more dispersed and survivable posture, raising the cost of any attempted blockade or coercive campaign.

Reinforcing U.S. Leadership and First-Island-Chain Stability

  • Integrated deterrence: By keeping Taiwan’s defences credible, arms sales complement U.S. and allied initiatives in Japan, the Philippines and Australia, supporting a layered deterrence architecture along the First Island Chain.
  • Signalling resolve: Regularised, smaller packages send a steady political signal of commitment to Taiwan’s security rather than relying solely on infrequent large deals.
  • Burden distribution: Taiwan’s investments in its own defence reduce pressure on U.S. forces and enable more flexible deployment of U.S. assets across the Indo-Pacific.

Impact on Global Supply Chains

  • Semiconductor security: Taiwan produces a dominant share of advanced logic chips crucial for smartphones, cloud computing, artificial intelligence and defence systems. A severe crisis or forced annexation would disrupt these flows and force expensive, rapid relocation of capacity.
  • Maritime trade: More than US$3 trillion in trade transits the South China Sea and nearby routes annually. Stable deterrence around Taiwan lowers the likelihood of blockades, shipping insurance spikes and large-scale diversions.
  • De-risking with allies: As the risk environment becomes clearer, the U.S., Japan, Europe and Taiwan are accelerating investments in additional fab capacity, advanced packaging and critical-materials supply, building redundancy into the system.

U.S. Defence Industry Beneficiaries

  • Prime contractors: U.S. companies such as Lockheed Martin, RTX (formerly Raytheon Technologies), Northrop Grumman and General Dynamics play central roles in supplying aircraft, missiles, radars and support equipment to Taiwan and other allies.
  • Revenue and backlog: Recent financial reports show that segments producing missiles, fire-control systems and air-defence solutions have seen solid sales growth and record order backlogs, reflecting sustained demand from U.S. allies in the Indo-Pacific and Europe.
  • Industrial ecosystem: Beyond the primes, a wide network of U.S. small and medium-sized manufacturers of components, electronics, software and logistics services benefits from Taiwan-related contracts and follow-on sustainment work.
  • Innovation spillovers: Investment in advanced sensors, secure communications and integrated air and missile defence for Taiwan contributes to broader innovation that can be repurposed in commercial aerospace, communications and cyber-security markets.

Implications for the U.S. Economy

  • Jobs and R&D: Arms sales to Taiwan and other partners support high-skill manufacturing and engineering jobs in the United States and encourage private investment in research and development in critical defence technologies.
  • Macroeconomic resilience: By lowering the probability of a major conflict in the Taiwan Strait, these policies help protect global growth and U.S. export markets, particularly in technology, industrial machinery and services.
  • Fiscal balance and industrial policy: While defence spending is a cost, the associated industrial activity can align with broader industrial policy goals, including rebuilding domestic production capacity in electronics, shipbuilding and aerospace.

Data & Signals

  • The U.S. arms-sale backlog to Taiwan remains in the tens of billions of dollars, with new air-defence and anti-ship capabilities being added while deliveries of earlier orders continue.
  • China continues to denounce U.S. arms sales and impose sanctions on U.S. defence firms, but Washington has reaffirmed that such sales are consistent with the TRA and with maintaining peace and stability in the Taiwan Strait.
  • U.S. and allied investment in defence industrial capacity has increased as governments adapt to a more contested security environment in both the Indo-Pacific and Europe.

Sources

  • Taiwan Ministry of Foreign Affairs – statements on recent U.S. arms-sale notifications and their consistency with the Taiwan Relations Act and the Six Assurances.
  • U.S. State Department and Defense Security Cooperation Agency – factsheets and notifications on arms sales to Taiwan and other Indo-Pacific partners.
  • News coverage and analysis from outlets such as Reuters, Taipei Times and defence-focused publications on recent packages and regional reactions.
  • Financial reports and investor presentations from major U.S. defence contractors outlining segment sales, backlogs and Indo-Pacific demand trends.
  • Think-tank and research-centre analyses on the economic impact of a Taiwan Strait crisis and the benefits of diversified, resilient supply chains.