The fate of Taiwan hangs in the balance, and it’s not just China’s military might that’s the concern – it’s the subtle, economic coercion that’s already underway. According to Scott Galloway, the real question isn’t whether Trump will stand by the U.S. commitment to an independent Taiwan, but how much he’ll be paid to look the other way. This isn’t just speculation; Trump’s history of conflating personal business with U.S. interests is well-documented, with examples ranging from a $400 million plane gifted by Qatar to Trump’s family enriching themselves by $4 billion during his first year back in office.

Galloway argues that China doesn’t need to fire a shot to repatriate Taiwan; instead, it can use its economic leverage to achieve its goals. Taiwan’s deep economic ties to China, with an estimated 80% of its businesses linked to the mainland, make it vulnerable to Beijing’s coercion. The recent U.S. intelligence assessment that China doesn’t currently plan to invade Taiwan in 2027 may have been influenced by the success of asymmetric warfare deployed by Iran and Ukraine, as well as the lack of combat experience among Chinese military personnel.

The real concern, however, is the potential for China to use its control over critical industries like chip-making and rare-earth mining to tax the global economy. Taiwan’s dominance in chip-making, with TSMC controlling 72% of the global foundry market, is both a blessing and a curse – while it provides a de facto U.S. defense commitment, it also creates a single point of failure that China can exploit. Galloway warns that if push comes to shove, the U.S. and the rest of the world might choose stability over Taiwan’s sovereignty.

The implications are far-reaching, and the Thucydides trap – the idea that a rising power will challenge a ruling power, leading to conflict – is very real. Xi Jinping’s question to Trump about avoiding this trap was met with a mixture of insult and bravado, but the reality is that the U.S. is already weakened by polarization, government dysfunction, and Trump’s war against American institutions.

Surprising Insights

• China may have softened its rhetoric towards the U.S. under Trump, viewing his transactionalism as something it can work with, whereas Biden was seen as a systemic threat.
• The U.S. intelligence assessment that China doesn’t currently plan to invade Taiwan in 2027 may have been influenced by the success of asymmetric warfare deployed by Iran and Ukraine.
• China controls 60% to 70% of rare-earth mining and 90% of the global processing capacity, giving it significant leverage over the global economy.
• Trump’s transgressions, including trading on inside information, are orders of magnitude more brazen and profitable than anything seen before.
• A conflict over Taiwan would cost the world economy an estimated $10.6 trillion, roughly 10% of global GDP in the first year alone.

Practical Takeaways

• The U.S. needs to acknowledge the reality of its declining influence and take steps to strengthen its institutions and leadership.
• Taiwan needs to continue to diversify its economy and reduce its dependence on China to avoid being coerced into capitulation.
• The global economy needs to develop alternative sources for critical industries like chip-making and rare-earth mining to reduce its vulnerability to China’s leverage.
• The U.S. needs to hold its leaders accountable for corruption and financial malfeasance, including Trump’s brazen and profitable transgressions.
• The world needs to recognize the risks of the Thucydides trap and work towards avoiding it through diplomacy and cooperation.