The United States has warned Europe that a potential conflict over Taiwan could trigger a massive global economic shock, highlighting the need for contingency planning. With concerns growing over military action in the Indo-Pacific region, the US State Department shared research with allies and partners that a Chinese blockade of Taiwan could cause $2.5 trillion in economic damage, based on a report by the research firm Rhodium Group. The warning was relayed to the European Commission and European government officials, as the US and its partners consider how to use sanctions against China in the event of military action against Taiwan.
The US has begun talks with the EU on how to prepare for a potential conflict over Taiwan. Some officials believe that preparing contingency plans and making them public could be part of a strategy to contain China. The US has also cited the example of the war in Ukraine to emphasize the need for contingency planning.
The State Department declined to comment on the report, but a US spokesman said that Washington is interested in peace and stability in the Taiwan Strait. Meanwhile, a senior EU official compared the dissemination of the report to a US move last year to disseminate information about Russia's military build-up around Ukraine, when some EU capitals rejected the idea of an invasion.
The warning about a potential conflict over Taiwan comes amid increasing tensions between the US and China, with both sides taking a tougher stance on issues such as trade, human rights, and territorial disputes. China has been increasing its military presence in the Indo-Pacific region, including around Taiwan, and has repeatedly warned the US against interfering in its affairs. The US, for its part, has reaffirmed its commitment to Taiwan's security and has increased its military presence in the region, including by conducting freedom of navigation operations in the South China Sea.
The warning also highlights the potential economic consequences of a conflict over Taiwan. Taiwan is a major producer of semiconductors and other high-tech components, which are critical to many industries, including the automobile and electronics sectors. A disruption in the supply of these components could cause significant disruptions to global supply chains and have a ripple effect throughout the global economy.
Overall, the warning from the US underscores the need for countries to prepare for the possibility of a conflict over Taiwan and to consider the potential economic consequences. It also highlights the need for dialogue and diplomacy to prevent such a conflict from occurring in the first place.
