Raymond Greene, director of the American Institute in Taiwan, made the warning at a defence forum in Taipei, describing the preservation of peace across the strait as one of the region’s most important priorities. He also pointed to an upcoming US-China summit as an opportunity to reduce the risk of miscalculation.
The warning reflects the extraordinary economic concentration surrounding Taiwan.
The island is a critical part of the global semiconductor supply chain, while the surrounding waters carry significant volumes of international trade. A conflict would therefore have consequences extending well beyond East Asia, potentially affecting electronics, automobiles, telecommunications, artificial intelligence and financial markets.
Taiwan has already begun strengthening its military posture. President Lai Ching-te’s government has committed more than T$1 trillion to defence spending, reflecting growing concern over China's military pressure and its stated intention to pursue eventual reunification, including by force if necessary.
For Beijing, Taiwan remains a core sovereignty issue. For Washington, the island occupies a central position in the broader strategy of maintaining the regional balance of power.
That creates a strategic environment in which economic interdependence and security competition increasingly overlap.
The semiconductor dimension is particularly important. Taiwan Semiconductor Manufacturing Company remains a critical supplier to the global technology industry, including advanced processors used in artificial intelligence and high-performance computing. Even a limited disruption could create shortages and delay production across multiple industries.
A prolonged conflict would introduce broader risks through shipping disruption, sanctions, capital flight and financial-market volatility. Governments and corporations would face pressure to restructure supply chains rapidly, while investors would have to reassess exposure to East Asian assets.
The warning from Washington therefore carries implications far beyond military planning.
Taiwan has become a central node in the infrastructure of the global economy, meaning that strategic instability around the island could rapidly become a global economic event.
The most important variable remains deterrence. The greater the perceived economic cost of conflict, the stronger the incentive for all sides to prevent escalation.
But deterrence depends on communication and credible signals.
With US-China relations already marked by strategic competition, the forthcoming summit represents an opportunity to reduce misunderstandings before they become irreversible.
