TAIPEI, Taiwan — Taiwan has opened initial talks with the United States on a weapons package that would include its first underwater-launched missiles and help counter China’s increasingly dominant military, according to Reuters. Officials say the multiyear plan is designed to increase deterrence against growing Chinese military intimidation while also telegraphing to Washington that Taipei plans to take greater responsibility for its own defence, Nov. 27, 2025.
The Taiwan $40 billion defence budget, unveiled a day earlier by President Lai Ching-te as a special appropriation, would be on top of the island’s regular 2026 defence outlays, already estimated to rise to about 3.3% of gross domestic product. A substantial portion of the influx of new funding is projected to be spent on long-range precision missiles, joint development programs, and a “Taiwan Dome” air-defence system patterned after Israel’s Iron Dome, information first reported in an Associated Press article highlighted by CBS News.
Taiwan has “finished preliminary coordination” with the Pentagon on what to buy and when, Defence Minister Wellington Koo told reporters, adding that U.S. officials have offered draft figures for Taiwan’s review, as well as projected delivery dates and costs.
Lai has presented the plan as both a response to what Taipei describes as increasing Chinese air and naval activity near the island and as evidence to the United States that Taiwan is serious about contributing more to its own security. The U.S. State Department has praised the proposal and, in remarks to Taiwan’s official news agency CNA, cited Lai’s promise to raise overall defence spending to at least 5% of GDP by 2030.
Those with a stake in the $40 billion Taiwan defence budget, inside as well as out of President Tsai Ing-wen’s ruling Democratic Progressive Party, insist that the eight-year package would also inject funds into local industry and generate a projected 90,000 new jobs on top of hundreds of billions in New Taiwan dollars of economic output. They argue that these benefits could help offset public resistance to borrowing to fund the plan.
But the proposal must still pass through Taiwan’s opposition-controlled legislature. The Kuomintang has criticised Lai for promoting the package in a Washington Post op-ed and has accused the government of relying too heavily on debt to finance it rather than cutting other spending.
Beijing has already condemned Taiwan $40 billion defence budget and demanded that Washington stop selling arms to what Beijing considers a renegade province, even as Chinese military aircraft, drones and warships make almost daily forays toward Taiwan that Taipei says are a rehearsal for a blockade or invasion.
Taiwan $40 billion defence budget is part of a longer buildup
If passed, the Taiwan $40 billion defence budget would cap years of rising Taiwanese military spending and stronger security ties with Washington. The United States in 2023 authorised a $619 million package of air-to-air missiles and other munitions to Taiwan for its F-16 fighter jets after what a spokesman for the Chinese Foreign Ministry called large-scale Chinese air incursions near the island – Reuters reported in 2023. In 2024, U.S. lawmakers folded billions of dollars in grants and loans to Taipei into a wide-ranging Indo-Pacific and Ukraine aid bill, and Taiwan subsequently hyped “deepening security cooperation” with the United States and other regional partners in another Reuters story about U.S. aid, as well as a subsequent Reuters report on its expanding alliances.
For Lai, the new plan is a litmus test of whether his minority government can still deliver a significant, multi-year security commitment without scaring voters or the financial markets.
The analysts say the coming debate will not only shape Taiwan’s next generation of weapons but also determine how sustainably the island can afford to pay for them. Whatever the legislators decide, the battle over Taiwan’s $40 billion defence budget highlights how its defences have become more closely intertwined with American strategy and China’s expanding military reach.
