A Chinese war over Taiwan would cost the EU $2 trillion a year — Bloomberg
In the worst-case scenario of a war between the U.S. and China over Taiwan, the EU economy would suffer losses of approximately $2 trillion in the first year.
A potential conflict would trigger a massive financial crisis whose devastating consequences would far exceed those of the 2009 crisis and the pandemic period.
Although Taiwan has traditionally relied on the U.S. rather than the European Union for protection against Beijing’s encroachments, European officials are concerned about geopolitical shifts.
They believe that U.S. President Donald Trump’s desire to restore relations with Chinese leader Xi Jinping could give Beijing the “green light” to invade.
Over time, this could allow China to dominate a critical part of the global economy and leave the EU on the sidelines, as Taiwan has become a key element in global supply chains, producing over 60% of the world’s most advanced logic semiconductors.
There are currently no signs that Xi is planning an invasion in the near future. But the cost of an invasion could also be devastating, and in this regard, the EU faces a greater risk than Beijing.
According to Marcin Jerzewski, head of the Taipei office of the Center for European Values on Security Policy, Taiwan is a “dangerous ‘blind spot’” for the EU.
He also added an important detail regarding the current situation on the global market.
“A blockade of Taiwan would be a serious European security and economic crisis even without an invasion,” Jerzewski notes.
According to a Bloomberg analysis, Germany would be hit hardest, as its manufacturing relies heavily on Taiwanese semiconductors and Chinese rare earth elements.
Germany’s economy will contract by approximately 14%, which is nearly twice as much as in the U.S. or China. By comparison, France’s GDP will shrink by 6.5%, Italy’s by 8.8%, and Spain’s by 7%.
Global GDP will shrink by more than 8%, and the world will face a severe shortage of certain goods whose production is concentrated in Taiwan, particularly medical devices such as pacemakers and insulin pumps.
In the EU, where decisions on many issues are typically made slowly due to the need to reach consensus among the 27 member states, coordinating a position on Taiwan is one of the most difficult tasks.
A European Commission spokesperson noted that the bloc insists on a peaceful resolution of tensions in relations between the two sides of the Taiwan Strait through dialogue.
If China decides to try to change the status quo by force or coercion, the EU will defend its interests, the spokesperson added.
According to informed sources, discussions on the European strategy regarding Taiwan are often held in secret and sometimes involve only select member states. Cyprus, which holds the rotating presidency of the bloc until next month, regularly vetoes any discussions on Taiwan.
Officials in Nicosia fear setting a precedent that could negatively impact its own territorial dispute with Turkey.
At these meetings, officials conducted tabletop exercises to analyze scenarios of escalating incursions into Taiwan’s airspace.
During recent meetings, it became clear just how unprepared Europe is for this, according to sources familiar with these discussions.
For example, during one of the sessions, a scenario was simulated to see what would happen if semiconductor exports from Taiwan were cut in half.
Europeans were confident that their economies could withstand such a blow until it became clear that Taiwan is entirely dependent on U.S. military support, meaning the U.S. would receive all the microchips, while Europe would be left empty-handed.
This is according to a Bloomberg report.
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