Taiwan’s Premier Cho Jung-tai has dismissed calls to raise the island’s defence spending to 10% of GDP, stating that such an increase is “impossible” given Taiwan’s current budget constraints. The remark comes in response to U.S. demands for heightened military expenditure amid growing security concerns in the Taiwan Strait.
Budget Limitations and Parliamentary Cuts
Taiwan’s estimated 2025 GDP is projected at NT$26.88 trillion, yet its total government budget has been reduced to NT$2.9 trillion following parliamentary cuts in January. Opposition lawmakers rejected Cho’s appeal to reconsider the reductions, reinforcing the financial limitations on defence expansion.
While U.S. President Donald Trump has urged multiple allies, including Taiwan, to allocate 10% of GDP to military spending, Cho reiterated that Taiwan lacks the fiscal capacity to meet such a demand.
“At this stage, the Republic of China (Taiwan’s official name) absolutely does not have the capacity to compile a defence budget of NT$2.6 trillion,” Cho stated.
Defence Spending Priorities and Strategic Adjustments
Taiwan is set to increase its defence budget to a record NT$647 billion in 2025, representing 2.5% of GDP. However, certain key programs faced reductions or freezes, including a 50% cut in funding for Taiwan’s indigenous submarine program and a drone industry development initiative.
President Lai Ching-te has warned that the budget cuts could weaken Taiwan’s security posture, vowing to increase defence spending beyond 3% of GDP through special budgets.
Rising Military Pressure from China
Beijing has intensified military pressure on Taiwan in recent years, conducting frequent naval and aerial drills around the island. Amid these rising tensions, Taiwan remains Washington’s most crucial security partner in the region, yet financial constraints continue to shape its defence strategy.
As the geopolitical landscape evolves, Taiwan’s government faces difficult trade-offs between maintaining fiscal discipline and reinforcing its military readiness.
