Trump says Taiwan should pay for US defense, stocks dip

Investing.com-- Republican presidential candidate Donald Trump said that Taiwan should pay the U.S. for supplying defense equipment as it does not give the country anything, which caused local stocks to fall on Wednesday.

Trump made the comments in an interview with Bloomberg Businessweek that was conducted on June 25 but published late-Tuesday.

“I know the people very well, respect them greatly. They did take about 100% of our chip business. I think, Taiwan should pay us for defense,” Trump said in the interview, adding that he felt the U.S. was no different than an insurance company.

Taiwan shares tumbled after Trump’s comments, with the Taiwan Weighted index losing 0.2%.

Contract chipmaker TSMC (TW:2330) (NYSE: TSM)- Taiwan’s biggest stock, slid 2%. Trump noted that Taiwan’s chipmaking industry was the country’s biggest asset, and was also a main point of focus for China.

Taiwan is a key part of the global supply chain for technology, with a bulk of the world’s semiconductors being manufactured in the country. TSMC stands at the heart of the industry, and is by far Taiwan’s most valuable company.

The U.S. is Taiwan’s biggest supplier of defense equipment, but has no formal agreement with the island. This has made Taiwan a key point of contention between the U.S. and China.

Chinese stocks also weakened after Trump’s comments, amid growing concerns that a Trump presidency could present more trade headwinds for Beijing. Trump’s administration had imposed steep tariffs on China in the late-2010s, which had sparked a trade war between Washington and Beijing.

China's Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.1% and 0.5%, respectively, while Hong Kong's Hang Seng lost 0.1%.

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