Taiwan Proposes Increase in Defense Budget to 3.32 Percent of GDP Following US Pressure

Udumbara Udumbara
Aug 23, 2025 - 09:57 Updated: Aug 23, 2025 - 01:10
0
Taiwan Proposes Increase in Defense Budget to 3.32 Percent of GDP Following US Pressure
.

Taiwan has proposed a 22.9 percent jump in its 2026 defense outlay in response to Chinese pressure and U.S. demands under President Donald Trump for higher defense spending.

The Executive Yuan—Taiwan’s executive branch of government—presented a draft on Aug. 21 outlining a top line of NT$949.5 billion (US$31.27 billion), equal to 3.32 percent of the forecast GDP.

“This is another concrete demonstration to the world and to our people of our determination and ability to safeguard national sovereignty and security, maintain stability and security in the Indo-Pacific region, and fulfil our shared responsibilities to the world,” Taiwanese Premier Cho Jung-tai said when presenting the budget.

Taiwanese President Lai Ching-te set the target earlier in the year, in the face of aggression from Beijing, which has never renounced the use of force to bring the island under its control.

On Feb. 14, after a high-level security meeting, Lai said the government would “prioritise special budget allocations to ensure that Taiwan’s defense budget exceeds 3 percent of GDP.”

The government followed a “NATO-model” accounting by folding veterans’ retirement costs and coast guard spending into the total for the first time, which lifts the headline share.

Earlier in the year, Washington had pressed Taipei to do more.

In a July 15 update for Congress, the U.S. Congressional Research Service (CRS) noted that “President Donald Trump has suggested that Taiwan spend 10 percent of its GDP on defense.”

The same CRS brief underscores that U.S. policy is guided by the Taiwan Relations Act (TRA).

Under the TRA, the United States will “make available to Taiwan such defense articles and services as may be necessary to enable Taiwan to maintain a sufficient self-defense capability,” and that any effort to decide its future by non-peaceful means is “of grave concern to the United States.”
Taipei ties the bigger budget to intensifying Chinese military activity. Taiwan’s Ministry of National Defense (MND) publishes near-daily reports of People’s Liberation Army aircraft and ship movements around the island, reflecting a now-routine operational tempo.

The Executive Yuan’s budget brief cites “threat conditions” as a driver for higher spending on munitions and spares.

According to Taipei’s spending plans, the budget covers personnel, operations and maintenance, and investment.

In addition, special budgets total NT$186.6 billion (US$6.2 billion) in 2026, combining ongoing fighter procurement and “sea and air power enhancement” with an expected NT$117.6 billion (US$3.9 billion) in new special appropriations.

The cabinet materials indicate the new tranche will support items such as additional combat aircraft and maritime defenses, according to an MND official.

The accounting change also broadens what Taiwan counts as “defense.”

In the plans, this includes the Taiwanese Veterans Affairs Council’s retirement benefits and coast guard outlays, which align with NATO’s approach to core defense spending.

The next steps for the draft budget are procedural. The Executive Yuan’s 2026 central government budget, including defense, will proceed to the Legislative Yuan—Taiwan’s legislature—for review, amendments, and approval.

Only after the Legislative Yuan approves it does it become law for execution in the next fiscal year.

Reuters contributed to this report.
.
Read More