Legislation recently introduced in the U.S. Senate would study the market implications and vulnerabilities related to hostilities toward Taiwan by the People’s Republic of China (PRC).
The Fortifying United States Markets Against PRC Military Escalation Act of 2025 would establish an Advisory Committee at the Financial Stability Oversight Council to analyze, study, and report on the market implications and vulnerabilities. The committee also would mitigate economic strain and market volatility related to any escalation by China toward Taiwan, and would help facilitate dialogue between policy makers, government agencies and capital markets constituents regarding preparing for a potential response.
In 2024, goods and services trade between the United States and China totaled approximately $660 billion while it totaled $186 billion between the United States and Taiwan.
Potential military hostilities toward Taiwan would close shipping lanes, having an immediate impact on supply chains, while the banking system would undergo stress. Small businesses nationwide would be impacted.
U.S. Sens. Dave McCormick (R-PA) and Jeanne Shaheen (D-NH) introduced the bill.
“Taiwan is an essential trading partner of the United States and a key exporter of advanced technology that are critical to global supply chains,” McCormick said. “This is an economic partnership that is of tremendous benefit to the U.S., but also carries economic vulnerabilities in the event of a conflict in the South China Sea.”