Bloomberg: Taiwan Strait War Would Shock Global Economy, EU Faces $2 Trillion First-Year Loss

(Central News Agency, Taipei, June 9, Combined Foreign Reports) A study shows that if the United States and China go to war over Taiwan, global GDP would shrink by more than 8%, and the European Union's economy would suffer an impact of approximately $2 trillion in the first year. Germany, whose manufacturing sector is heavily dependent on Taiwanese semiconductors and Chinese rare earths, would be the hardest-hit EU country.

According to Bloomberg News, the cost of a Chinese invasion of Taiwan could be unbearable, and the EU's exposure in this regard is higher than Beijing's.

According to research conducted by Bloomberg Economics, if the worst-case scenario of a US-China war over Taiwan materializes, the EU economy would suffer an impact of approximately $2 trillion within the first year.

The hardest-hit country, Germany, would see its economy contract by about 14%, roughly twice the impact on the US or China. The GDPs of Italy, Spain, and France would contract by 8.8%, 7%, and 6.5%, respectively.

These conclusions highlight a major lesson from US President Trump's attack on Iran: although the US calls the shots on the international stage, Europe often bears a greater cost.

Bloomberg Economics analysis indicates that under this scenario, global GDP would shrink by more than 8%, an impact far exceeding the 2009 financial crisis and the COVID-19 pandemic. At the same time, the world would face severe shortages of specific goods dominated by Taiwanese production, such as medical supplies like pacemakers and insulin pumps.

Marcin Jerzewski, director of the Taipei office of the Czech think tank European Values Center for Security Policy, pointed out, "Even without an invasion, a blockade of Taiwan would trigger a security and economic crisis in Europe."

However, Jerzewski noted that the Taiwan issue is a "dangerous blind spot" for the EU.

Insiders say that discussions on European Taiwan strategy are often conducted discreetly, sometimes limited to a group of like-minded member states to avoid influence from countries that tend to accept Beijing's position.

European officials have simulated various scenarios, including escalated incursions into Taiwan's airspace, China cutting off critical mineral supplies, China inspecting ships flying EU flags, or a full blockade of Taiwan. Recent discussions reportedly highlighted that Europe is simply not prepared.

During one simulation where Taiwan's semiconductor exports were halved, European representatives initially thought their economies could withstand the blow. It wasn't until representatives from Taipei and Washington corrected them, noting that Taiwan is completely militarily dependent on US support and that in a crisis, the US would prioritize acquiring all chips, leaving Europe with nothing.

If a crisis escalates rapidly, Europe might only have a few hours to respond, and the current system is incapable of reacting that quickly. Countries like Italy or Spain, while concerned by the analysis results, are reportedly hesitant to conclude on taking necessary actions.

European countries find it particularly difficult to deal with China's gray-zone harassment. These actions do not constitute acts of war, but if left unchecked, they could allow China to gradually increase its influence over Taiwan.

A person who has participated in war games noted that Europe's standard response in the past was to call for de-escalation and follow the US lead. However, with Trump's return to the White House, transatlantic coordination on China policy has completely collapsed, changing the situation.

According to Jerzewski, by the end of last year, European countries had shifted to coordinating first among themselves, and then with Japan. The European Values Center for Security Policy regularly holds such war games.

Europe is trying to find more ways to cooperate with Taiwan, especially as Taiwan is key to a future dominated by artificial intelligence (AI), and its economic growth is envied by many European partners.

Some Taiwanese officials have privately admitted that they are concerned the US is no longer as reliable as before, and are therefore investing more effort in cultivating relations with Europe, even though both sides know that the EU cannot replace US military support. (Editor: He Hongru) 1150609