Taipei’s administration announced plans for a supplementary defense budget of approximately US$40 billion, as part of a broader effort to bolster Taiwan’s military capabilities amid heightened cross-strait tensions. The announcement, delivered in a Washington Post op-ed by President Lai Ching‑te on November 25, confirms the magnitude of the island’s commitment to upgrading its defense posture.

According to government budget documents, Taiwan’s defense allocation for fiscal year 2026 is projected at NT$949.5 billion (roughly US$30.25 billion), representing 3.32 % of GDP—its highest level since 2009. The supplementary US$40 billion is designed to sit on top of that baseline figure, meaning total budgeted defense outlays could approach the equivalent of US$70–75 billion over a multi-year period depending on exchange rates and outlay timing.

Rationale and strategic goals

In his op-ed, President Lai described the supplementary budget as a “landmark package” that will “not only fund significant new arms acquisitions from the United States, but also vastly enhance Taiwan’s asymmetrical capabilities.” The emphasis on asymmetrical warfare aligns with Taiwan’s long-term strategy to offset China’s numerical and qualitative advantages through mobile missile units, drones, mines, and coastal defense systems.

Lai sets the longer-term goal of raising defense spending to 5 % of GDP by 2030, a significant jump from the projected 3.3 % in 2026. In Taipei’s view, increased spending will serve as both deterrent and reassurance: deterrent for possible coercion by Beijing, reassurance for international partners such as the United States. The Washington Post piece includes a specific reference to the U.S. administration under Donald Trump, noting that “the international community is safer today because of … the Trump administration’s pursuit of peace through strength.”

Budget documents show that the Cabinet’s spending plan for 2026 allocates NT$93.8 billion more for the military compared to the previous year—a 20.1 % increase—to fund additional arms purchases, ammunition and spare parts. Earlier briefings indicate that special defense budgets totalling NT$117.6 billion (about US$3.85 billion) will target submarine production, unmanned surface vehicles, drones and foreign military sales from the U.S.

Procurement and U.S. links

Taiwan expects the supplementary budget to facilitate “significant” U.S. arms procurement. The op-ed published by President Lai signals expectation of new American systems, although the particulars of the planned purchases have not been publicly detailed beyond broad references.

The legislation that governs U.S.–Taiwan defense cooperation, the Taiwan Relations Act, obliges the U.S. to provide Taiwan with defense capabilities. Although the official diplomatic ties have been severed since 1979, the law remains in force. Nonetheless, defense analysts point to manufacturing back-logs and delays in key systems such as F-16 upgrades and long-range anti-ship missiles, suggesting that procurement timelines may extend for years.

With defense spending set to surpass 3 % of GDP in 2026, Taiwan is now closer to levels seen among some frontline NATO members. NATO standards were referenced by Taipei’s Premier when announcing the budget earlier in the year. The strategic objective is clear: Taiwan intends to signal a credible self-defense posture to both Beijing and Washington, while expanding its domestic defense-industrial base.

Political and regional implications

Taiwan’s decision to propose such a large supplementary budget comes amid sustained pressure from the People’s Republic of China, which regards the island as part of its territory and has not ruled out use of force to bring it under control. President Lai’s op-ed states that while Taipei remains open to dialogue, “our democracy and freedom remain non-negotiable.”

This announcement also underscores Taiwan’s shifting policy from purely incremental increases to a more rapid military expansion and modernization. Earlier commentary by Taiwanese experts warned that the island should prioritise self-defense capability and missile acquisitions to counter cross-strait threats, suggesting the new budget aligns with those assessments.

The size of the supplementary package—US$40 billion—marks one of the largest single-year defense boosts in Taiwan’s modern history. It may affect regional calculations, particularly for Japan and Australia, both of which maintain security partnerships with the United States and monitor Taiwan-China dynamics closely. Beijing has not yet officially responded to the op-ed but has previously criticised Taiwanese defense expansion as “provocative.”

Domestically, the additional budget requires legislative review. Taiwan’s legislature must approve the special budget allocation and any arms procurement contracts it triggers. Fiscal implications may raise debates over trade-offs with other public spending priorities or long-term debt servicing.

Outlook and risks

Assuming the supplementary US$40 billion is approved and executed, Taiwan’s defense spending could approach or exceed US$70 billion over multiple years, depending on exchange rates and supplementary budgets. The execution schedule, however, remains uncertain. Many defense systems have multi-year delivery timelines, which means that procurement outcomes may not materialise immediately.

Budget documents for 2026 remain subject to legislative scrutiny. The Cabinet’s proposal is pending review and could be revised as it moves through parliamentary processes. Analysts caution that Taiwan’s economy must absorb the fiscal cost of higher defense outlays, while also funding social services and infrastructure.

Taiwan’s ambition to raise defense spending to 5 % of GDP by 2030 faces both economic and political constraints. Economic growth, changes in the security environment, and evolving U.S.–China relations all play roles in shaping what is achievable. Meanwhile, the People’s Liberation Army continues to expand its capabilities with an official defense budget of over US$220 billion for 2023.

The supplementary budget proposal makes clear that Taiwan expects to lean heavily on U.S. arms exports and asymmetrical warfare strategies to deter military coercion. Whether the plan succeeds will depend not only on budget execution but also on the timing of deliveries, integration into Taiwan’s forces, legislative approval, and how Beijing chooses to respond.

For now, Taiwan has placed defense spending at the centre of its national security strategy, signalling a shift from modest increases to aggressive modernisation. The details of how the supplementary US$40 billion will be allocated remain to be approved and executed, but the announcement sets a clear marker for Taipei’s strategic priorities moving forward.