Potential conflict in Taiwan: Costs outweigh benefits

Abstract

Nancy Pelosi’s visit to Taiwan on August 2022 was held during a complicated context for the world due to the Russian invasion of Ukraine. Beijing’s reactions translated into military exercises generated a series of interpretations and predictions regarding the possibility of an armed conflict in the Taiwan Strait. Based on Taiwan’s current position as a key factor in international trade and in key industries, this article, through analysis of primary and secondary sources, explores the implications of a conflict scenario from both economic and strategic perspectives. On the one hand, Taiwan participates both in the value and production chains of many countries such as Mexico, for which a conflict would paralyze key industries, such as automotive and technology sectors, for example. On the other, from a strategic perspective, Taiwan has the military support of the United States and its allies Japan and South Korea, who have both sufficient and prepared resources regarding armed forces, however in the case of Seoul, a defined position represents a challenge given the nature of the relationship with Beijing. Analysis of the sources presented in this article shows that an armed conflict in the Taiwan Strait exceeds the costs compared to the benefits for both Taiwan’s neighbors and distant partners such as Mexico.