Balance of Power, Interdependence and Strategic Ambiguity: Taiwan's Trade Leverage in the US-PRC Context

Abstract

Amid sustained US-PRC rivalry and Taiwan's semiconductor centrality, the durability of Taiwan's trade leverage merits direct assessment. We assess whether US security signaling, together with deep PRC interdependence, enables Taiwan to sustain trade leverage despite limited diplomatic recognition. The study combines a narrative review with an in-regime (2023-2025) descriptive analysis of Taiwan's trade, focusing on partner shares and product-mix shifts that indicate movement toward higher-value segments. Results show diversification without decoupling. Overall volumes rise modestly while exports to the US tilt toward higher-value goods. Lastly, PRC-bound flows remain sizable but differently composed. Interpreted through balance of power, complex interdependence, and strategic ambiguity, the evidence suggests that semiconductor-anchored centrality, together with credible security signals and diversified economic ties, sustains leverage through composition rather than formal recognition. The article recenters Taiwan in the US-PRC context and clarifies observable implications for supply-chain policy and trade diplomacy.