Flashpoints | Diplomacy | East Asia

Taiwan: A Growing Economic Partner for the EU in Troubled Times

EU-Taiwan relations increasingly resemble a form of functional strategic partnership, despite the lack of formal diplomatic recognition. 

Workers decorate with European flags ahead of the European Chamber of Commerce’s 2018 “Europe Day Dinner” in Taiwan, May, 17, 2018.

Much has changed since September 2021, when the European Union launched its Indo-Pacific strategy. In less than five years, armed conflicts in Ukraine and in the Middle East have shocked Europeans who know they can no longer fully rely on the close protection of their traditional ally, the United States. Although the U.S. remains NATO’s largest military power, Washington’s recent signs and messages have brought confusion to Europe. In some ways, East Asia faces a similar situation, where Japan and South Korea are now looking at diversification options.

Meanwhile, the EU is trying to “pivot” toward Asia, and has developed multiple ties with Japan, India, South Korea, and ASEAN. In that context, Taiwan remains a special case due to its unique situation as the world’s premier producer of high-end semiconductors. As Europe seeks to diversify supply chains and reduce vulnerabilities in strategically important sectors, Taiwan’s comparative advantages have become increasingly aligned with European interests.

Within this broader transformation, Taiwan has emerged as a significantly more important partner for the EU than at any previous point since diplomatic relations between the EU and the People’s Republic of China were established, 41 years ago. Once viewed primarily as a trading partner constrained by the EU’s adherence to the “One China” policy, Taiwan has increasingly been incorporated into European discussions on semiconductor resilience, critical technologies, cybersecurity, digital governance, and Indo-Pacific stability. 

In the past five years, Europe has become acutely aware of the importance of Taiwan. European delegations, from Brussels to EU member-states, have visited Taipei frequently; the number of engagements has surged by 20 percent since the COVID-19 pandemic, according to the EU-Taiwan Tracker by CEIAS. Cooperation projects in technology and education have multiplied. The Taiwanese authorities have been welcoming and open to collaboration. 

In addition, the EU also started to engage with Taiwan through costly commitments. On December 1, 2025, Taiwan and the German manufacturer Merck announced a “Semiconductor Solutions Site” in Taiwan’s Kaohsiung city. Similarly, in July 2023, the ribbon was cut for ASML’s Linkou campus in Taoyuan city. This shows that while geopolitical uncertainty lies ahead, economic ties still manage to form. 

Despite the tricky waters both countries find themselves in, the numbers are clear: Taiwan’s Overseas Community Affairs Council (OCAC) announced that between 2016 and 2025, Taiwan investment in the EU amounted to US$13.88 billion, a 650 percent surge compared to just US$1.85 billion between 2006 and 2015.

As the EU is facing an increasingly challenging conversation with China over a trade deficit that reached 360 billion euro in 2025, Taiwan can stand out as a promising dialogue partner in the matters of technology and economic security. However, figuring out how to make the EU-Taiwan collaboration sustainable is more important than simply pouring in truckloads of investment.

While EU-Taiwan interaction is built on commercial activity, China has a long history of punishing any actor who shows the slightest friendliness toward Taiwan. Take the example of Japan: since a comment made by Prime Minister Takaichi Sanae in November 2025 suggesting that a Taiwan crisis might be a question of national survival for Japan, Beijing continuously slapped sanctions on Japanese companies. China added 20 Japanese firms to its export control list in February 2026, with another 20 added to the watchlist in June 2026. To use the Chinese axiom, Beijing is “killing the chicken to scare........

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