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Students of a military school wave flags during a ceremony in Taipei. Photo: Mandy Cheng/AFP via Getty Images

As the U.S. and China gear up for a trade war, Taiwan is stuck in the middle — and worried it'll become a bargaining chip.

The bottom line: The U.S. is stoking Beijing’s ire by increasing its engagement with the self-governing island. Things could heat up quickly if the U.S. backs away from the One-China policy, which prevents Washington from recognizing Taiwan’s independence. While he’s unlikely to abandon the policy entirely, President Trump could raise the issue if China won’t give in to his trade demands, according to Richard Bush, a Taiwan expert at Brookings.

  • New National Security Adviser John Bolton argued that Trump should "play the Taiwan card" against Beijing in a January op-ed in the Wall Street Journal, titled "Revisit the 'One-China Policy.' Mike Pompeo, the secretary of state designate, has also made pro-Taiwan comments.
  • Trump's State Department approved a measure granting American companies licenses to sell Taiwan technology that would allow it to build submarines, reports Reuters, citing Taiwan's Central News Agency.
  • The backdrop: A few weeks ago, Trump signed the Taiwan Travel Act, which Beijing viewed as "a signal that [he] may be reverting to his pre-inauguration inclination to reconsider the 'One China Policy,' one of the foundations of the U.S.-China relationship," writes Axios contributor Bill Bishop.
What to watch
  • For Taiwan: U.S. action against Chinese products could inadvertently hurt Taiwan, which is involved in the supply chain of many goods that are manufactured in China. And Taipei fears it could be the party that China punishes — instead of the U.S. — for what it considers transgressions against the 'One-China Policy,' Bush tells Axios.
  • For the U.S.: "It's looking like the U.S. is increasingly is going to move in a direction of treating Taiwan more like a normal country," says Chris Johnson, a China expert at the Center for Strategic and International Studies. Beijing could perceive that as a more holistic containment policy against China, and there's a risk China fires back with a response beyond trade actions, he says.
  • For China: Defense ministry spokesman Wu Qian said Monday, in response to the submarine reports, "China's military has the ability and determination to defeat all attempts to separate our country, and will adopt all necessary measures to resolutely defend national sovereignty, security and territorial integrity."

Go deeper

Biden plans to ask public to wear masks for first 100 days in office

Joe Biden. Photo: Mark Makela/Gettu Images

President-elect Joe Biden and Vice President-elect Kamala Harris sat down with CNN on Thursday for their first joint interview since the election.

The big picture: In the hour-long segment, the twosome laid out plans for responding to the pandemic, jump-starting the economy and managing the transition of power, among other priorities.

The quick FCC fix that would get more students online

Illustration: Sarah Grillo/Axios

As the pandemic forces students out of school, broadband deployment programs aren't going to move fast enough to help families in immediate need of better internet access. But Democrats at the Federal Communications Commission say the incoming Biden administration could put a dent in that digital divide with one fast policy change.

State of play: An existing FCC program known as E-rate provides up to $4 billion for broadband at schools, but Republican FCC chairman Ajit Pai has resisted modifying the program during the pandemic to provide help connecting students at home.

Dion Rabouin, author of Markets
31 mins ago - Politics & Policy

America's hidden depression

Biden introduces his pick for Treasury secretary, Janet Yellen, on Dec. 1. Photo: Alex Wong/Getty Images

President-elect Biden faces a fragile recovery that could easily fall apart, as the economy remains in worse shape than most people think.

Why it matters: There is a recovery happening. But it's helping some people immensely and others not at all. And it's that second part that poses a massive risk to the Biden-Harris administration's chance of success.