Taiwan puts US$40 billion toward buying U.S. weapons and building a defence dome

Taiwan's President Lai Ching-te delivers a speech during the inauguration ceremony of M1A2T Abrams Main Battle Tanks in Hsinchu County, Taiwan, Friday, Oct. 31, 2025. (AP Photo/Chiang Ying-ying)

TAIPEI, Taiwan — Taiwan’s President Lai Ching-te on Wednesday announced a special US$40 billion budget for arms purchases, including to build an air defence system with high-level detection and interception capabilities called Taiwan Dome, as the U.S. pressures the island to increase its defence spending.

The budget will be allocated over eight years, from 2026 to 2033, and comes after Lai already pledged to raise defence spending to five per cent of the island’s GDP, as part of his strategy amid China’s threats of invasion.

“China’s threats to Taiwan and the Indo-Pacific region are escalating,” Lai said Wednesday. “Recently, various types of military intrusions, maritime gray zones and disinformation campaigns have been occurring in Japan, the Philippines and around the Taiwan Strait, causing deep unease and distress to all parties in the region.”

“Taiwan, as the most important and most critical part of the first island chain, must demonstrate our determination and take on a greater responsibility in self-defence,” he said, referring to the string of islands stretching from Japan’s East China Sea through the Philippines in the Pacific Ocean.

Currently, Taiwan has set an increase in its defence budget to 3.3 per cent of its GDP for 2026, allocating $949.5 billion Taiwan dollars (US$31.18 billion). U.S. President Donald Trump has demanded Taiwan raise its defence spending to as much as 10 per cent of GDP, a proportion well above what the U.S. or any of its major allies spend.

The U.S. State Department on Wednesday said it welcomes Taiwan’s budget announcement and “supports Taiwan’s acquisition of critical defence capabilities, commensurate with the threat it faces.”

It also said it welcomes commitments by Lai’s administration to increase defence spending to at least five per cent of GDP by 2030, “which demonstrates resolve to strengthen Taiwan’s self-defence capabilities.”

Taiwan, a self-ruled island, is claimed by China. In recent years, China has deployed warplanes, navy ships and drones toward the island on a daily basis in military exercises as part of its efforts to exert pressure.

Lai had previewed the announcement in an op-ed for The Washington Post on Wednesday, saying the special budget would be used to purchase arms from the U.S. He told reporters Wednesday, however, that the budget has nothing to do with the government’s tariff negotiations with the U.S.

Wellington Koo, Taiwan’s defence minister, said Wednesday the US$40 billion is an upper limit for the special budget and that it will be used to buy precision-strike missiles and work toward the joint development and procurement between Taiwan and the U.S. of equipment and systems.

Lai also said his government would focus on finding ways to increase its defence against Beijing’s “psychological warfare” as China attempts to “weaken our unity.” He said the government will monitor and increase public awareness of China’s interference attempts during major events and elections.

Lai also commented on an escalating feud between China and Japan, which started after Japan’s conservative new leader said the country might get involved militarily if China makes a move against Taiwan. The remarks incensed Beijing.

Lai said Japanese Prime Minister Sanae Takaichi‘s comments appeared to be focused largely on the stability of the region.

“We hope China can understand that each country in the Indo-Pacific region has a responsibility to its peace and stability, and that we especially hope China, as a major power in the region, would also demonstrate the responsibilities of a major power,” Lai said. “Instead, it has continued to raise threats and attacks toward neighboring countries. This is not the way a responsible major power acts.”

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Huizhong Wu reported from Bangkok. AP writer Didi Tang in Washington contributed to this report.

Taijing Wu And Huizhong Wu, The Associated Press