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Gains for India as US, Japan introduce tweaks in Taiwan policy?
On February 13, the U.S. Department of State updated its fact sheet on Taiwan, notably removing the phrase "we do not support Taiwan independence," and affirming that Taiwan is an important trading partner in “semiconductors and other critical supply chains.” This change comes as President Trump simultaneously alleged that Taiwan had stolen the US' chip business.
At the executive level, the Trump administration has been consistently employing pressure tactics to extract more value from allies and partners, even as U.S. strategy to compete with China sharpens at the official level. It is likely that the changed wording is set to give the U.S. greater leverage in its trade war with China.
Japan has also subtly shifted its stance regarding Taiwanese identity, recognizing it more explicitly amid rising tensions in the Taiwan Strait. This evolving landscape provides India with an opportunity to enhance its strategic positioning on Taiwan.
The recent U.S.-India joint statement emphasized investments aimed at expanding Indian manufacturing capacity, reflecting a broader strategy to diversify supply chains away from China. This recalibration is particularly relevant in the semiconductor sector, where Taiwan plays a critical role.
To capitalize on this momentum, India should further incentivize Taiwanese semiconductor firms to establish operations within its borders, particularly focusing on mature node fabrication (28 nm, 40 nm) and OSAT (Outsourced Semiconductor Assembly and Testing) facilities. Instead of competing directly in advanced fabrication, India has positioned itself as an attractive destination for overseas semiconductor firms seeking diversification. The PSMC-Tata joint venture exemplifies this model; it has already secured orders from Tesla while leveraging technology transfer and minimizing capital-intensive investments.
This greater manoeuvring room in its approach towards Taiwan should allow New Delhi to widen its ties with Taipei across economic, technological, and cultural spaces.
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US to Europe: Get Serious
Global geopolitical landscape is undergoing a significant transformation as the United States and Europe experience a deepening rift, with the U.S. prioritizing its national interests and strategic goals by resetting ties with Russia to seek an end to the Ukraine conflict. Recent talks in Riyadh between U.S. Secretary of State Marco Rubio and Russian Foreign Minister Sergey Lavrov, which notably excluded Ukrainian representatives, have raised alarm bells in Europe.
At the recent Munich Security Conference, Vice President JD Vance also articulated strongly that there are now fundamental cultural divisions that have emerged across both sides of the Atlantic. Many in Europe are reading this situation as a call for long-pending action–for too long, Europe has been geopolitically risk-averse, deindustrialising, and left battling many internal cultural cleavages.
This evolving landscape also puts a spotlight on Riyadh, which may soon host Trump-Putin talks that could pave the way for broader Saudi-Israeli discussions and a U.S.-led restructuring of the situation in West Asia.
As the U.S. seeks to normalize relations with Russia, it appears to be attempting to wean Moscow away from its close partnership with China—an alignment that resonates with India's vision of an Indo-Pacific accommodating Russian interests. India's consistent stance on Russia throughout the Ukraine conflict is now vindicated. By leveraging its longstanding ties with Russia and enhancing cooperation with both the U.S. and Europe, India stands to gain significantly from these geopolitical shifts.
China strengthening ties in the Indo-Pacific
China is actively strengthening ties with ASEAN as it navigates the post-tariff trade environment. Malaysia is set to host an inaugural joint summit for China, ASEAN, and the Gulf Cooperation Council in May 2025. Prime Minister Anwar Ibrahim has emphasized that ASEAN must expand its global engagement beyond traditional partners.
With ASEAN members feeling the impact of U.S. steel and aluminum tariffs, the "China Plus One" strategy employed by many member states becomes increasingly difficult to sustain. This situation paves the way for increased Chinese imports among Indo-Pacific states.
India has an opportunity to position itself as the ‘plus-one’ in the region's multipolar landscape, counterbalancing China's strategy.
