Taiwan will spend up to an additional $40 billion for defense, including an air defense system with high-level detection and interception capabilities called the Taiwan Dome, President Lai Ching-te announced in late November 2025.
The funds will be allocated from 2026-33 to supplement Taipei’s pledge to raise defense spending to 5% of the self-governed island’s gross domestic product (GDP).
Lai said recent military intrusions, maritime gray-zone activities and disinformation campaigns have caused “deep unease and distress” in the region.
“Taiwan, as the most important and most critical part of the first island chain, must demonstrate our determination and take on a greater responsibility in self-defense,” he said, referring to the string of islands stretching along the eastern edge of the East China and South China seas, from Japan through the Philippines.
Taiwan is set to increase its defense budget to 3.3% of GDP for 2026, allocating more than $31 billion. Taiwan’s parliament must approve the measure.
The United States welcomed the budget announcement and “supports Taiwan’s acquisition of critical defense capabilities, commensurate with the threat it faces,” the U.S. State Department said.
The U.S. does not have formal diplomatic relations with Taiwan, but a long-standing federal law requires Washington to make available “defense articles and defense services” in necessary quantities for Taiwan to “maintain a self-sufficient capability.” Taipei’s commitment to increase defense spending to at least 5% of GDP by 2030 “demonstrates resolve to strengthen Taiwan’s self-defense capabilities,” the U.S. State Department said.
Taiwan Defense Minister Wellington Koo said $40 billion is the supplementary budget’s upper limit. It will fund precision-strike missiles and drones as well as the proposed Taiwan Dome.
Lai said his administration also will focus on increasing defenses against Beijing’s “psychological warfare” as China attempts to “weaken our unity.” That will include monitoring and increasing public awareness of China’s interference attempts during elections and other major events.