How Hormuz Could Shape China’s Taiwan Strategy

Iran's actions in the Strait of Hormuz, where missile and drone strikes convinced insurance markets to halt commercial shipping without a formal blockade, offer a "proof of concept" for Chinese military planners regarding Taiwan. This strategy, which relies on creating uncertainty to disrupt trade rather than direct invasion, could shut down Taiwan's semiconductor manufacturing, which produces over 90% of the world's most advanced chips. The Trump Administration has attempted to set up a government-backed insurance program through the U.S. International Development Finance Corporation (DFC) to restore transit through Hormuz, but it has so far failed. China has also built a "fortress economy" with significant reserves, including 69% of global corn and 60% of global rice as of 2022, to outlast economic standoffs. Washington lacks a coordinated allied framework to deliver critical supplies or prevent a global financial crisis if a Taiwan supply chain disruption occurs.