Trump: Taiwan must pay the United States for defence

Republican presidential candidate Donald Trump said that Taiwan should pay the United States for its defence, since the United States receives nothing in return. 

This statement caused a sharp reaction in the financial markets. TSMC shares fell by more than 2%. The market as a whole declined by about 0.4%.

Trump stressed that the United States, like an insurance company, protects Taiwan, but does not receive any compensation for this. He noted the dominant position of Taiwanese chip manufacturer TSMC in the U.S. market, saying that the company controls about 100% of chip production in the country. 

Taiwan's Prime Minister Cho Yung-Tai responded to Trump's statements, stressing that Taiwan and the United States have close relations and Taiwan is responsible for its own security. He noted that Taiwan is increasing its defence budget and is ready for self-defence. 

The United States is Taiwan's most important international partner and arms supplier, but there is no formal defence agreement between them. Nevertheless, the United States is legally obliged to provide Taiwan with means for self-defence.  China, which considers Taiwan its territory, conducts military exercises near the island and uses «gray zone» tactics to put pressure on the island.