Taiwan is not planning to increase its defense spending in 2025. This will leave the total at 638.6 billion New Taiwan dollars ($21 billion), or 2.38% of its GDP.
In February, Taiwanese President Lai Ching-te (賴清德) said that Taiwan would increase its defense spending to over 3% of GDP in 2025. This was at least partially in response to calls from within the Trump administration for much larger increases.
Lai’s administration had proposed a budget of 2.45% of GDP which the Legislative Yuan, Taiwan’s parliament, then cut to 2.38%.
To increase defense spending above 3%, Taiwan would have to pass a special budget this year. That hasn’t happened yet, but there were rumors earlier this month that special budgets were coming soon.
Today, Taiwanese premier Cho Jung-tai (卓榮泰) said that Taiwan will spend 3.32% of GDP on defense next year, or 949.5 billion New Taiwan dollars ($31.1 billion).
As part of the announcement, Hsieh Chi-hsien (謝其賢), head of the Comptroller Bureau at the Ministry of National Defense, revealed that there is 186.8 billion New Taiwan dollars ($6.12 billion) allotted for special budgets, in 2026 not 2025.
“The implementation of the budget can only proceed once the budget review is completed (usually around next January). So, in practice, the special budget will not begin to be used until next year,” Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) told Domino Theory in a written response.
Taiwan has been under pressure to increase its defense spending from various quarters in the Trump administration. Elbridge Colby, Trump’s undersecretary of defense for policy, said during his confirmation hearing that Taiwan should spend 10% of GDP. Lai made his February announcement of 3% in this context as well as the broader tariff and trade war that was beginning.
It’s unclear what impact the failed attempt this summer to recall opposition legislators, who hold a majority in parliament, has had, but Lai’s administration must have been aware that if the majority was overturned they would be able to pass any special budget they wanted. Now, one could only pass with the support of the Chinese Nationalist Party (KMT).
On August 9, Liberty Times reported that Taiwan will buy more HIMARS rocket artillery and more NASAMS air defense systems from the U.S. The total cost would be approximately 150 billion New Taiwan dollars ($4.92 billion). The South China Morning Post reported on August 19 that Taiwan plans to buy nearly 50,000 drones over the next two years, across five different operational classes.
If the Lai administration announces more arms purchases from the U.S., it’s possible they could request an immediate special budget to pay for it. But this probably won’t be necessary. Taiwan is still using annual special budget supplements to pay for earlier purchases like the F-16 Vipers.
Correction: The currencies used for the value of the budget and its components have been reversed, with New Taiwan dollars placed before U.S. dollars.
Leave a Reply