ISTANBUL

Taiwan's leader William Lai Ching-te on Thursday unveiled the fiscal year 2026 budget, which includes a 20.1% increase in defense spending amid rising US tariffs.

The 3.35 trillion Taiwan dollar (approximately $109.7 billion) budget plan includes 949.5 billion Taiwan dollars (about $31.1 billion) for defense, which amounts to over 3% when special funds are included, according to a statement on Lai's account on the US social media company Facebook.

The proposed budget comes amid shrinking revenues due to a new fiscal law and tariff uncertainty with the US.

Taiwan is facing a 20% tariff from the US as part of a series of "reciprocal" tariffs imposed on 67 countries.

Earlier, Trump suggested that Taiwan increase its defense budget by 10%.

If the budget is approved by Taiwan's legislature, known locally as the Legislative Yuan, it will be the first time the defense budget has exceeded 3% since 2009.

The draft was approved by the Cabinet, but the Legislative Yuan, which is dominated by the opposition, may block the budget.

Opposition lawmakers cut the budget for the fiscal year 2025.

The other three budget priorities are social welfare, industrial development, and social resilience.
Taipei intends to boost funding for five trusted industries and increase AI project budgets by 85%.

Lai further stressed fiscal discipline in light of declining revenues.