TW-D-06: Taiwan's 2026 Budget Battle, the KMT-TPP Bloc Confrontation, and the Defence-Spending-to-Three-Per-Cent-of-GDP Question (2025–2026)

1. Key Takeaways

• The September 2025 Executive Yuan submission of the proposed FY2026 Central Government General Budget to the Legislative Yuan opened the second full-calendar-year budget cycle of the Lai Ching-te administration under continuing Kuomintang-Taiwan-People's-Party (KMT-TPP) plus-two-non-partisan working-majority configuration of 62 of 113 seats in the post-recall LY. The Executive Yuan budget submission — transmitted to the LY in early-to-mid September 2025 [TBD-VERIFY exact submission date] under the Budget Act (預算法) framework — proposed total expenditures in the range of NT$3.2–3.4 trillion [TBD-VERIFY exact proposed total — the EY-published Budget Statement indicates aggregate expenditures consistent with the post-2025 fiscal-trajectory and the post-2025 elevated defence-spending tranche], with major-programme allocations across defence (a proposed NT$949 billion or thereabouts [TBD-VERIFY exact MND-line proposal, treated in detail at TW-F-04]), social-welfare and pension (the largest single category), education, infrastructure, and discretionary categories. The September–December 2025 LY deliberation cycle proceeded under conditions sharply distinct from the January 2025 FY2025 budget-cut sequence: the Great Recall (大罷免) vote-day sequence of 26 July and 23 August 2025 had failed to produce a structural LY-arithmetic change (the post-recall LY composition continued the KMT 52 / DPP 51 / TPP 8 / non-partisan 2 baseline subject to a small number of successful recalls and by-election outcomes), and the October 2025 Kuomintang chair election had produced the most consequential party-internal succession of the post-2020 era. The third-reading passage cycle in late December 2025 [TBD-VERIFY exact passage date] produced budget reductions and freezes more modest than the January 2025 NT$200-billion-plus aggregate cut, reflecting the post-recall political environment, the post-March 2025 cross-Strait-resilience-budget commitments, and the Trump-2 administration's continuing pressure for elevated Taiwan defence outlays.

• The defence-spending-to-GDP-ratio trajectory has emerged as the central strategic-and-fiscal question of the Lai administration's mid-term, with the Trump-2 administration's public-statement demand-range spanning 3 per cent, 5 per cent, and (in some statements) 10 per cent of GDP, against an FY2025 operative baseline of approximately 2.45 per cent of GDP and a proposed FY2026 budget moving the ratio above 3 per cent [TBD-VERIFY exact FY2026 defence-spending-to-GDP ratio — the proposed NT$949 billion defence budget against projected FY2026 GDP of approximately NT$28–29 trillion would produce a ratio of approximately 3.3–3.4 per cent, though the exact ratio depends on the GDP-deflator assumption and the special-budget-and-NCSIST-fund inclusion methodology]. The Trump-2 administration's defence-spending demand has been articulated across the Trump-2 administration's first-eighteen-month window through statements by Secretary of Defense, Senate Foreign Relations Committee members, and President Trump himself; the publicly reported demand-range has varied across 3 per cent (the most-frequently-referenced figure), 5 per cent (the Trump-articulated figure in several public-statement contexts), and 10 per cent (the Trump-articulated figure in at least one widely reported statement in 2025) [TBD-VERIFY exact statement chronology and figure references]. The Cho Jung-tai (卓榮泰) Executive Yuan position has been to advance the defence-spending trajectory progressively toward 3 per cent of GDP through the FY2026 and FY2027 budget cycles while resisting the higher Trump-2-articulated targets on fiscal-sustainability and operational-absorptive-capacity grounds. The Hudson Institute hawk position (Seth Cropsey, Iskander Rehman) has argued that even 3 per cent is insufficient given the post-2027 Davidson Window conflict-risk assessment; the Ministry of Finance fiscal-orthodox position has argued that defence-spending above 3 per cent without compensating revenue-raising measures threatens the sovereign-debt sustainability framework; the Lai-pragmatist position has navigated between the strategic-demand and fiscal-constraint poles.

• The post-October 2025 Kuomintang chair election produced a new KMT chair-tenure operating in a sharply intensified strategic-confrontation posture toward the Lai administration's FY2026 budget submission, with the post-Chu KMT chair's institutional priorities centred on the November 2026 Nine-in-One election candidate-recruitment cycle, the early 2028 presidential-positioning, and the KMT-internal cross-Strait-engagement-legacy-versus-cross-Strait-pragmatism balancing. The October 2025 KMT chair-election result selected the new chair from a candidate slate including Hau Lung-pin (郝龍斌), Cheng Li-wen (鄭麗文), Lo Chih-chiang (羅智強), Sean Lien (連勝文), and Chang Ya-chung (張亞中) [TBD-VERIFY exact October 2025 chair-election candidate roster and vote-share results — treated in detail at TW-D-05]. The new chair's institutional positioning across the September–December 2025 budget-deliberation cycle has continued the post-2024 KMT-TPP working-coalition tactical pattern while progressively moderating the budget-cut framing relative to the January 2025 sequence, reflecting both the post-recall political environment and the operational realities of post-March 2025 cross-Strait-resilience-budget commitments. The KMT caucus convener Fu Kun-chi (傅崐萁) has continued to lead the KMT-LY-Caucus budget-position coordination; the post-chair-handover KMT Central Standing Committee has continued to support the KMT-TPP working-coalition operational framework.

• The Taiwan People's Party (TPP) under Chairman Huang Kuo-chang (黃國昌), continuing through 2025–2026 under the post-Ko-Wen-je institutional-realignment trajectory, has continued the legislative-confrontation tactical posture established in late 2024 and early 2025, with the FY2026 budget-deliberation cycle providing the principal institutional terrain for the post-recall TPP positioning. Huang Kuo-chang's chairmanship-tenure, which commenced in January 2025 [TBD-VERIFY exact accession date — treated in detail at TW-D-04 and TW-D-05], has continued the dual capacity as TPP Chairman and as a principal TPP-LY-Caucus voice; the TPP's eight LY seats — all allocated under the proportional-representation party-list provisions — have continued to hold the median-vote position in every contested budget motion, producing what Wen-Ti Sung (Atlantic Council) characterised as a "kingmaker without a kingdom" structural position. The TPP-LY-Caucus budget position across the September–December 2025 deliberation cycle has continued to align with the KMT-LY-Caucus on the broad budget-reduction-and-freeze direction while sustaining sharper criticism of the post-March 2025 Foreign Hostile Force designation's procedural-bypass-of-the-LY operational architecture. The TPP's polling-share trajectory through 2025–2026 has stabilised at approximately 10–13 per cent across the late-2025-and-early-2026 monthly tracking polls [TBD-VERIFY exact monthly-tracking-poll readings].

• The Constitutional Court Justice-confirmation paralysis has continued through 2025 and into 2026, with the LY's continuing KMT-TPP-led refusal to confirm Lai Ching-te's renominated Justice candidates sustaining the eight-sitting-Justice constitutional-court configuration that the Constitutional Judgment No. 2 of 2025 (28 March 2025 [TBD-VERIFY exact case number and date]) partial-strike-down restored to operative functionality. The Lai government's renominations across the post-March 2025 window have produced sustained LY non-confirmation outcomes, and the consequence has been continuing operation of the eight-Justice bench through the May 2026 cut-off. The Executive Yuan's referral of additional LY-passed legislation to the Constitutional Court for review has proceeded under this configuration; the operative effect has been that constitutional-court adjudication of contested LY-passed legislation — including the question of whether the EY will refer the FY2026 budget passage for partial-unconstitutionality review on the basis of any KMT-TPP-imposed cuts to the defence, MAC, NSC, or constitutionally-mandated expenditure lines [TBD-VERIFY whether such EY-referral has occurred for the FY2026 budget] — has continued at the eight-Justice bench with the Judgment No. 2 of 2025 unblocking of operative functionality permitting limited but constrained constitutional review. The KMT-TPP-articulated position has continued to be that Lai's renominations have failed to address LY-articulated concerns about ideological balance and judicial-independence credentials of named nominees; the DPP-EY position has continued to be that the LY's non-confirmation pattern constitutes deliberate constitutional-disablement of a co-equal branch.

• The post-Strait-Thunder-2025 cross-Strait pressure architecture has continued the post-2022 PLA grey-zone-pressure pattern at progressively elevated tempo, with the Strait Thunder-2025A exercise of April 2025 and the Strait Thunder-2025B exercise of later 2025 [TBD-VERIFY exact exercise designations and dates] together producing the most-intensive PLA exercise tempo of the post-2022-Pelosi-visit era and operating as the operational counterpart to the PRC State Council Taiwan Affairs Office's continuing rhetorical confrontation of the Lai administration. PLA grey-zone-pressure activities through 2025–2026 have included continuing median-line crossings by PLA Navy and PLA Air Force assets at elevated tempo relative to the 2023–2024 baseline; continuing Coast Guard activity around Kinmen, Matsu, and Pratas; continuing post-Strait-Thunder-2025 exercise patterns including blockade-rehearsal-and-decapitation-rehearsal exercise components reported by IISS, CSIS, and the ROC MND. The post-March 2025 Ten Measures operationalisation has continued through 2025–2026 across cross-Strait people-flow restrictions on PRC entertainers and influencers, cross-Strait exchange-programme scrutiny, restored military-court jurisdiction in espionage cases, PRC-citizenship-renunciation enforcement, and subsea-cable infrastructure-protection upgrades. The post-2025 subsea-cable incidents — including post-February 2025 cable-cut incidents in the Penghu, Pratas, and Taishi cable-system zones [TBD-VERIFY exact post-2025 subsea-cable incident chronology] — have continued to generate cross-Strait-architectural friction and have been the operational basis for the post-2025 satellite-redundancy programme acceleration via Eutelsat OneWeb and other non-Starlink providers.

• The indigenous-submarine Hai Kun (海鯤) programme, the Sky Bow (天弓, Tien Kung) III air-defence-missile integration into the layered air-and-missile-defence architecture, and the continuing Foreign Military Sales (FMS) pipeline including F-16V Block 70/72, M1A2T Abrams, HIMARS, AGM-84L Block II Harpoon Coastal Defence System, AIM-120D AMRAAM, Stinger, NASAMS, Volcano, and MQ-9B SeaGuardian deliveries together constitute the operational substance of the FY2026 defence-budget submission. The Hai Kun programme — the indigenous submarine prototype unveiled in September 2023 and undergoing sea trials across 2024–2026 — has progressed toward the projected mass-production-batch funding tranche, with the FY2026 budget submission including [TBD-VERIFY exact FY2026 Hai Kun-batch funding line] the post-prototype-trials follow-on-batch acquisition envelope. The Sky Bow III air-defence missile, produced by the National Chung-Shan Institute of Science and Technology (NCSIST, 國家中山科學研究院), has continued to integrate into the layered air-and-missile-defence architecture alongside the US-supplied Patriot PAC-3 MSE systems and the legacy Hawk and Sky Bow II systems. The FMS pipeline through 2025–2026 has included continuing F-16V Block 70/72 deliveries (the 66-aircraft order announced August 2019 and progressively delivered through the 2024–2026 window with completion projected by approximately end-2026), continuing HIMARS rocket-system deliveries, continuing AGM-84L Block II Harpoon coastal-defence-system deliveries (the December 2022-announced 400-missile package with delivery extending through 2028), continuing AIM-120D AMRAAM deliveries, continuing Stinger MANPADS deliveries, and post-2025 announced packages [TBD-VERIFY exact post-March 2025 FMS-package announcement dates and aggregate values].

• The Trump-2 administration's post-April 2025 reciprocal-tariff regime, the 9 April 2025 ninety-day pause, the continuing USTR-Taiwan negotiating-track activity through May 2026, and the Section 232 semiconductor investigation findings together constitute the parallel economic-pressure-track operating alongside the defence-spending-demand track, with the TSMC Arizona-Kumamoto-Dresden expansion narrative providing the Taiwan-side procurement-offer enhancement architecture. The 2 April 2025 Liberation Day tariff announcement initially placed a 32-per-cent reciprocal-tariff rate on Taiwan goods exports to the US; the 9 April 2025 ninety-day pause was followed by extension cycles and continuing USTR-Taiwan negotiating-team activity led on the Taiwan side by Vice Premier Cheng Li-chiun (鄭麗君) in her Office of Trade Negotiations (OTN, 行政院經貿談判辦公室) lead role and Minister of Economic Affairs Kuo Jyh-huei (郭智輝) [TBD-VERIFY exact tenure status of Kuo through May 2026]. The Section 232 semiconductor investigation, initiated under the Trump-2 administration's Department of Commerce framework, has produced findings [TBD-VERIFY exact Section 232 report-publication date] and has operated as the proximate basis for any semiconductor-specific tariff actions under the Trump-2 architecture. The TSMC Arizona-Kumamoto-Dresden expansion narrative — operationalised through TSMC's progressive build-out of fabrication facilities in Arizona (the Phoenix campus with multiple-fab-phase architecture), Kumamoto (the Japan ASML-and-Sony-co-investment fab), and Dresden (the European Semiconductor Manufacturing Company joint-venture under construction) — has been treated by both the Trump-2 administration and the Lai administration as the principal procurement-offer-and-strategic-positioning architecture for the post-2025 US-Taiwan economic relationship (treated in detail at TW-D-03 and TW-G-01).

• The energy-policy confrontation between the Lai/Executive-Yuan Pingtung Liquefied-Natural-Gas (LNG) terminal positioning and the post-October 2025 KMT nuclear-revival push has emerged as a structural domestic-policy axis cross-cutting the budget-deliberation and 2026-election-positioning architectures. The Lai administration's energy-policy positioning — continuing the 2016-Tsai-era nuclear-phase-out trajectory toward the original 2025 nuclear-free homeland target, partially adjusted under post-2024 operational-and-strategic-resilience considerations — has centred on the Pingtung Third LNG Terminal (台電第三天然氣接收站, Taidian Disan Tianranqi Jieshouzhan) construction completion and the continuing build-out of renewable-energy capacity including offshore wind and solar. The Ma Anchu Number 3 reactor (馬鞍核三廠), Number 2 reactor (核二廠), and Number 1 reactor (核一廠) decommissioning sequence had been the operational baseline of the pre-2025 nuclear-phase-out trajectory. The post-October 2025 KMT-chair-tenure's renewed advocacy for nuclear-revival — including extension-of-operating-life proposals for the Number 3 reactor (currently in cold-shutdown decommissioning) and exploration of new-build reactor advocacy under post-2025 strategic-energy-resilience framing — has produced a sharp domestic-policy contestation, with the post-2025 nuclear-policy referendum-or-legislation pathways uncertain through May 2026 [TBD-VERIFY exact post-2025 nuclear-policy referendum-or-legislation status].

• The foreign-policy continuity under Defence Minister Wellington Koo (顧立雄) and Foreign Minister Lin Chia-lung (林佳龍), continuing through 2025–2026, has sustained the post-2024 US-Taiwan-arms-and-strategic-coordination architecture, the semi-official Taiwan-Japan-Korea coordination architecture, and the post-2025 bilateral-relations continuity across the European, Indian, and Latin American tracks, with the Holy See (Vatican) diplomatic-continuity question, the WHO-observership and ICAO blocked-status continuation, and the 12-or-13-formal-diplomatic-ally roster preservation constituting the institutional-anchor points. MND Minister Wellington Koo — the first civilian Defence Minister in approximately fourteen years, appointed May 2024 — has continued through May 2026 [TBD-VERIFY exact tenure status]; the MND under Koo has continued the post-2024 asymmetric-defence-procurement operational architecture and the post-March 2025 Whole-of-Society Defence Resilience Committee operationalisation. MOFA Minister Lin Chia-lung — former Taichung Mayor 2014–2018, former Minister of Transportation 2019–2022, MOFA Minister from May 2024 — has continued through May 2026 [TBD-VERIFY exact tenure status]; the MOFA under Lin has continued the post-2024 New Southbound Policy operationalisation and the post-2025 European-and-Indian bilateral-track architecture including the Czechia Senate Speaker visit programme continuation, the Lithuania Taiwan Representative Office consolidation, the Slovakia-and-Slovenia bilateral programme, the Paraguay diplomatic-relations preservation, and the India Taipei Economic and Cultural Centre programme expansion. The Holy See diplomatic-continuity question — Taiwan's only formal European diplomatic ally and a structurally-critical institutional anchor — has continued through 2025–2026 under post-2025 Vatican-PRC sino-Vatican-agreement renewal cycles [TBD-VERIFY post-2025 Holy See-Taiwan-PRC trilateral diplomatic-architecture status]. The WHO-observership-blocked status (continuous since 2017 under PRC objection following the post-2016 Tsai-era recalibration) and the ICAO/INTERPOL/UNFCCC blocked-status continuation has continued through 2025–2026, with semi-official side-arrangements and bilateral-track engagement providing the operational substitute.

• The Lai Ching-te approval-rating trajectory across 2025–2026 has stabilised in the 35–45-per-cent satisfaction range across TPOF, TVBS, ETtoday, My-Formosa, and TISR monthly tracking polls [TBD-VERIFY exact monthly-tracking-poll readings], reflecting both the post-recall political-environment-baseline and the post-March 2025 cross-Strait-resilience-architecture operational delivery. The Lai approval trajectory has moved through three distinguishable phases across 2024–2026: (a) a post-inaugural elevated-approval phase across May–October 2024 in the 50-per-cent satisfaction range, reflecting honeymoon-period dynamics and the cross-Strait-stability bonus from the 20 May 2024 inaugural; (b) a post-October-2024-constitutional-court-paralysis-and-January-2025-budget-cut decline phase across November 2024 – March 2025 in the 35–40-per-cent range; (c) a post-March-2025-Foreign-Hostile-Force-designation-and-post-recall stabilisation phase across April 2025 – May 2026 in the 38–45-per-cent range. The 2026 Nine-in-One local-elections scheduled for 21 November 2026 (treated in detail at TW-D-05) constitute the next institutional inflection point for the Lai approval-rating trajectory and the broader DPP-mid-term-electoral-positioning architecture.

• The structural-political reading of the FY2026 budget cycle and the post-recall mid-term is that the constitutional-procedural impasse of 2024 and early 2025, the failed Great Recall campaign of mid-2025, and the post-recall continuing KMT-TPP-working-majority LY configuration have together produced a sustained-equilibrium configuration under which the FY2026 budget deliberations have proceeded with comparatively moderated political-confrontation tempo, while the defence-spending question and the cross-Strait-pressure track have together produced the principal strategic-and-fiscal axis across which the Lai government's mid-term trajectory operates. The three-account analytical synthesis: (a) the DPP-EY frame positions the FY2026 budget passage and the elevated defence-spending tranche as evidence of democratic-resilience-under-existential-pressure, with the KMT-TPP-working-majority's moderated post-recall confrontation as evidence of the broader democratic-coalition's recognition of cross-Strait-pressure-tempo-elevation operational realities; (b) the KMT-TPP-frame positions the same record as evidence of legitimate-legislative-supervision-of-executive-power, with the post-recall moderated confrontation as evidence of the KMT-TPP-coalition's responsible-governance-orientation under post-2025 strategic-environment conditions; (c) the non-partisan-academic-frame positions the same record as evidence of sustained-divided-government-equilibrium consistent with the post-2000 alternation pattern, with the FY2026 budget passage as the institutional-baseline against which the November 2026 Nine-in-One-elections and the early 2028 presidential-cycle positioning will operate. The integrative assessment positions the post-recall FY2026-budget mid-term as a sustained-equilibrium configuration rather than a structural realignment, with the November 2026 Nine-in-One-elections and the FY2027 budget cycle as the next confirmable inflection points.

2. The Record in Brief

The Lai Ching-te administration entered the September 2025 budget-submission window in the structural configuration produced by the eighteen-month sequence treated in TW-D-02, TW-D-04, and TW-D-05. That sequence — the post-13 January 2024 KMT-TPP-plus-two-non-partisan working majority of 62 of 113 LY seats; the May–October 2024 Guohui Gaige (國會改革, "legislative-reform") constitutional contest concluded by Constitutional Judgment No. 9 of 2024; the December 2024 Constitutional Court Procedure Act amendment and the resulting eight-Justice-bench paralysis; the January 2025 approximately NT$207.5 billion FY2025 central-government-budget cuts-and-freezes [TBD-VERIFY exact aggregate figure]; the 13 March 2025 Lai Foreign Hostile Force (境外敵對勢力) designation and the Ten Measures (十項措施) implementation package; the 28 March 2025 Constitutional Judgment No. 2 of 2025 partial-strike-down of the Constitutional Court Procedure Act amendment restoring operative functionality to the eight-Justice bench; and the May–August 2025 civil-society-led Great Recall (大罷免) vote-day sequence concluded by the 26 July and 23 August 2025 [TBD-VERIFY exact dates] tranche-by-tranche vote-day outcomes that left the KMT-TPP working-majority configuration largely intact — together constitute the structural context against which the FY2026 budget cycle and the post-recall mid-term unfolded.

The mid-term-defining sequence covered by TW-D-06 opens with the post-recall return of the Eleventh-Term Legislative Yuan to regular legislative session in late August 2025 and the Executive Yuan's September 2025 submission of the proposed FY2026 Central Government General Budget. The September–December 2025 LY deliberation cycle proceeded through the standard Budget Act (預算法) framework: first-reading floor consideration in September 2025; standing-committee detailed review across the eight LY standing committees (Internal Administration; Foreign Affairs and National Defence; Economic; Finance; Education and Culture; Transportation; Judicial and Organic Laws; Social Welfare and Environmental Hygiene) across October and November 2025; second-reading consideration of standing-committee reports and amendments across late November and early December 2025; and third-reading passage in late December 2025 [TBD-VERIFY exact third-reading-passage date]. The post-passage Executive Yuan response framework, the post-passage operative-budget-implementation window opening 1 January 2026 under the FY2026 fiscal year, and the post-passage Constitutional Court referral consideration (if applicable) carry the analytical thread through to the May 2026 cut-off.

The parallel sequences across 2025–2026 — the October 2025 Kuomintang chair-election transition (treated in detail at TW-D-05), the continuing Trump-2 tariff-architecture and Section 232 semiconductor investigation pressure track, the continuing Hai Kun submarine programme and the post-2025 FMS-pipeline deliveries, the post-Strait-Thunder-2025A/B cross-Strait pressure architecture, the energy-policy Pingtung-LNG-versus-KMT-nuclear-revival confrontation, and the 21 November 2026 Nine-in-One local-elections candidate-positioning — operate as the broader strategic-and-political environment within which the FY2026 budget cycle is the central institutional terrain. The May 2026 cut-off positions the Lai government at approximately the two-year mark of its four-year term, with the 2027 budget submission cycle (opening September 2026) and the November 2026 Nine-in-One election (21 November 2026 vote day) as the next institutional inflection points.

3. Post-Recall Legislative Arithmetic and the FY2026 Budget Submission Cycle

The post-recall Legislative Yuan composition through May 2026 has continued to reflect the post-13 January 2024 KMT-TPP-plus-two-non-partisan working majority of 62 of 113 seats. The KMT seat allocation has remained at approximately 52 seats subject to the small number of successful recalls and any post-recall by-election outcomes [TBD-VERIFY exact post-recall seat-by-seat composition through May 2026; the published reporting through May 2026 indicates that the small number of successful recalls in the 26 July and 23 August 2025 vote-day sequence produced by-elections in which the partisan distribution shifted marginally but did not alter the structural KMT-TPP working-majority configuration]. The DPP seat allocation has remained at approximately 51 seats with any post-recall by-election gains marginally adding to the DPP count. The TPP's eight-seat allocation — all allocated under the proportional-representation party-list provisions rather than constituency-specific districts and therefore not subject to the recall procedure under the Public Officials Election and Recall Act (公職人員選舉罷免法) — has remained intact through May 2026 given the absence of any TPP-legislator recall propositions reaching the stage-three vote-day threshold. The two non-partisan legislators (Chen Chao-ming 陳超明 and May Chin / Kao Chin Su-mei 高金素梅) have continued to caucus with the KMT for organisational purposes. The Speaker (Han Kuo-yu 韓國瑜, KMT) and Deputy Speaker (Johnny Chiang 江啟臣, KMT) have continued in their roles through May 2026.

The Executive Yuan's September 2025 submission of the proposed FY2026 Central Government General Budget operated under the standard Budget Act framework. Under Article 46 of the Budget Act, the Executive Yuan must submit the proposed central-government general budget to the Legislative Yuan at least four months before the start of the fiscal year — i.e., by end-August or early-September of the preceding calendar year. The Cho Jung-tai (卓榮泰) Executive Yuan submitted the proposed FY2026 budget in early-to-mid September 2025 [TBD-VERIFY exact submission date], accompanied by the Premier's budget-submission address to the LY and the EY-press-conference series articulating the budget's principal allocations and policy-priorities. The proposed total expenditures, in the NT$3.2–3.4 trillion range [TBD-VERIFY exact proposed total], represented a moderate-increase trajectory relative to the FY2025 operative budget after the January 2025 cuts-and-freezes, with the elevated defence-spending tranche (the proposed NT$949 billion or thereabouts [TBD-VERIFY exact MND-line proposal]) and the continuing social-welfare-and-pension allocations as the principal-magnitude drivers.

The September–December 2025 LY deliberation cycle proceeded through the eight standing committees, with the KMT-TPP working majority controlling the convenor positions across each committee. The defence-budget-focused Foreign Affairs and National Defence Committee — under post-2025 KMT-aligned convenership — produced the principal-locus of defence-budget-line scrutiny, with the KMT-TPP-LY-Caucus positions on F-16V acquisition, the Hai Kun submarine mass-production batch, the Sky Bow III procurement-line, the FMS-funded pipeline-deliveries, and the MND modernisation-line review documented across the committee-record archive. The Finance Committee — under post-2025 KMT-aligned convenership — produced the principal-locus of revenue-projection-and-debt-financing-line scrutiny, with the KMT-TPP-LY-Caucus positions on the Ministry of Finance revenue-projections, the post-2025 sovereign-debt-management framework, and the tax-reform-package proposals under review. The Internal Administration Committee, the Economic Committee, the Education and Culture Committee, the Transportation Committee, the Judicial and Organic Laws Committee, and the Social Welfare and Environmental Hygiene Committee each produced respective sectoral-budget-line scrutiny across the October–November 2025 review window.

The second-reading consideration across late November and early December 2025 produced the operative budget-reduction-and-freeze package. The published reporting across Liberty Times, China Times, United Daily News, and Focus Taiwan in the November–December 2025 reporting window indicated [TBD-VERIFY exact second-reading reduction-and-freeze magnitudes] that the FY2026 budget reductions and freezes were substantially more moderate than the January 2025 NT$207.5-billion-plus aggregate, reflecting the post-recall political environment, the post-March 2025 cross-Strait-resilience-budget commitments, the Trump-2 administration's continuing pressure for elevated Taiwan defence outlays, and the operational realities of the Hai Kun mass-production-batch and FMS-pipeline funding requirements. The KMT-TPP-LY-Caucus budget-position coordination across the second-reading window — led on the KMT side by caucus convener Fu Kun-chi (傅崐萁) and on the TPP side by the post-early-2025 TPP-caucus-convener arrangement [TBD-VERIFY exact 2025–2026 TPP caucus convener] reflecting the post-Huang-Kuo-chang chairmanship reorganisation — produced sustained pressure on the discretionary-budget categories while broadly sustaining the defence-budget and the constitutional-mandate budget lines.

The third-reading passage in late December 2025 [TBD-VERIFY exact passage date] concluded the FY2026 budget cycle and opened the operative-budget-implementation window beginning 1 January 2026. The post-passage Executive Yuan response framework — articulated through Premier Cho Jung-tai's post-passage statements, the EY press-conference series, and the post-2025 Cabinet-coordination architecture — has continued to emphasise the protection of the defence-budget, the MAC-and-NSC operational-budget, and the MND-modernisation-budget lines from any further LY-imposed mid-year reductions. The post-passage Constitutional Court referral consideration — i.e., whether the EY will refer the FY2026 budget-passage to the Constitutional Court for partial-unconstitutionality review on the basis of any KMT-TPP-imposed cuts to constitutionally-mandated expenditure lines — has remained pending through May 2026 [TBD-VERIFY whether such EY-referral has occurred for the FY2026 budget].

The structural reading of the FY2026 budget cycle is that the post-recall political environment has produced a measure of legislative-pace moderation relative to the January 2025 sequence, with the KMT-TPP working-majority's tactical-confrontation tempo moderated by post-recall positioning calculus, post-October-2025 KMT-chair-handover stabilisation, and the operational-realities-recognition of post-March-2025 cross-Strait-resilience-budget commitments. The DPP-EY position has continued to operationalise the post-March 2025 Ten Measures architecture within the constraint set produced by the LY-passed budget, with the post-passage operative-budget-implementation window 1 January 2026 onwards providing the operational baseline for the post-2025 cross-Strait-resilience-and-deterrence architecture.

4. The Defence-Spending-to-Three-Per-Cent-of-GDP Question

The defence-spending-to-GDP-ratio trajectory has emerged across 2025–2026 as the central strategic-and-fiscal question of the Lai administration's mid-term. The Trump-2 administration's public-statement defence-spending demand on Taiwan has been articulated across the Trump-2 administration's first-eighteen-month window through statements by Secretary of Defense, senior administration figures, and President Trump himself; the publicly reported demand-range has varied across three principal figures: 3 per cent of GDP (the most-frequently-referenced figure across post-March 2025 administration-and-congressional statements), 5 per cent of GDP (the Trump-articulated figure in several public-statement contexts including post-Liberation-Day tariff-negotiation framing), and 10 per cent of GDP (the Trump-articulated figure in at least one widely reported 2025 statement to the press) [TBD-VERIFY exact Trump-2 administration defence-spending demand chronology and figure-by-figure attribution]. The Trump-2 administration framing has positioned the defence-spending demand within the broader transactional-alliance architecture under which the US security commitment to Taiwan operates as a function of Taiwan's own demonstrated commitment to its defence — a framing consistent with the broader Trump-2 alliance-policy approach across NATO, Japan, Korea, and other US-security-partner relationships.

The FY2025 operative defence-spending-to-GDP baseline, after the January 2025 KMT-TPP-LY-Caucus cuts and freezes, was approximately 2.45 per cent of GDP [TBD-VERIFY exact ratio — the MND-published FY2025 defence-budget of approximately NT$647 billion against projected FY2025 GDP of approximately NT$26 trillion produces a ratio of approximately 2.5 per cent under the standard defence-budget-only methodology; the inclusion of special-budget and NCSIST-fund tranches under broader methodologies produces ratios of approximately 2.8–3.0 per cent]. The proposed FY2026 defence budget — in the range of NT$949 billion or thereabouts [TBD-VERIFY exact MND-line proposal — TW-F-04 documents this figure as the FY2026 submission magnitude] — would produce a defence-spending-to-GDP ratio above 3 per cent under the standard defence-budget-only methodology, with projected FY2026 GDP of approximately NT$28–29 trillion. The FY2026 submission therefore represented the first time in the post-2000 era that the Taiwanese defence-budget-line approached the 3-per-cent-of-GDP threshold under the standard methodology, and the post-2025 trajectory toward 3 per cent constituted the Lai administration's primary fiscal response to the Trump-2 defence-spending demand.

The Cho Jung-tai Executive Yuan position across 2025–2026 has been to advance the defence-spending trajectory progressively toward 3 per cent of GDP through the FY2026 and FY2027 budget cycles while resisting the higher Trump-2-articulated targets (5 per cent and 10 per cent) on fiscal-sustainability and operational-absorptive-capacity grounds. Premier Cho's public statements across the September 2025 budget-submission cycle, the October–November 2025 LY deliberation window, and the post-December 2025 third-reading-passage window have consistently emphasised: (a) the trajectory-toward-3-per-cent commitment as the operative response to the Trump-2 demand; (b) the fiscal-sustainability constraint imposed by the post-2025 sovereign-debt-management framework; (c) the operational-absorptive-capacity constraint imposed by the MND's existing acquisition-and-integration pipeline including the Hai Kun submarine programme, the F-16V Block 70/72 deliveries, and the FMS-pipeline integration; (d) the need for compensating revenue-raising measures or expenditure-reallocation if the defence-spending trajectory is to be sustained above 3 per cent in the FY2027 and later budget cycles. The Cho position has been articulated in coordination with MND Minister Wellington Koo (顧立雄), MOFA Minister Lin Chia-lung (林佳龍), and Vice Premier Cheng Li-chiun (鄭麗君) in her OTN-lead role.

The Su Tseng-chang (蘇貞昌) post-Premier advocacy commentary — Su served as Premier 2017–2018 and 2019–2023 under Tsai Ing-wen and has retained an active commentary role in the post-2023 DPP-establishment-elder architecture — has across 2025–2026 supported the trajectory-toward-3-per-cent positioning while advocating for accelerated movement above 3 per cent on strategic-deterrence grounds [TBD-VERIFY exact Su Tseng-chang post-2025 defence-spending commentary chronology]. The DPP-Central-Standing-Committee position has across 2025–2026 broadly aligned with the Cho EY position, with sustained internal-DPP debate on the optimal pace of trajectory-acceleration.

The Hudson Institute hawk position, articulated through Seth Cropsey, Iskander Rehman, and the broader Hudson Taiwan-policy track, has across 2025–2026 argued that even 3 per cent of GDP is insufficient given the post-2027 Davidson Window conflict-risk assessment and the PLA modernisation tempo. The Hudson position has consistently advanced the case for Taiwan defence-spending in the 3-to-5-per-cent-of-GDP range as a strategic-deterrence floor, with the Cropsey-Rehman commentary emphasising: (a) the asymmetric-defence-procurement requirements (particularly Hsiung Feng II/III anti-ship missiles, Sky Bow III air-defence missiles, HIMARS, sea-mine and unmanned-surface-vessel capabilities, and resilient C4ISR architecture) that require sustained funding above the historical 2.0–2.5-per-cent baseline; (b) the post-2025 PLA exercise-tempo elevation requiring elevated readiness-and-training expenditure; (c) the post-2025 cyber-and-information-warfare architecture requiring elevated MND-and-NSC-and-MODA inter-ministerial budget tranches; (d) the strategic-deterrence-credibility requirement of demonstrated Taiwan defence-commitment as a precondition for sustained US support under Trump-2. The Hudson position has been amplified through Wall Street Journal op-eds, Foreign Affairs essays, and US-Senate-Foreign-Relations-Committee testimony across 2025–2026.

The Ministry of Finance fiscal-orthodox position, articulated through Finance Minister Chuang Tsui-yun (莊翠雲), the Budget, Accounting and Statistics Office (主計總處, Zhujizongchu), and the National Treasury Administration, has across 2025–2026 emphasised the fiscal-sustainability constraint on defence-spending-trajectory acceleration. The MOF position has been built on: (a) the post-2025 sovereign-debt-to-GDP ratio trajectory and the Public Debt Act (公共債務法) statutory ceiling of 40.6 per cent of GDP for central-government debt; (b) the post-2025 demographic-decline-driven pension-and-social-welfare expenditure trajectory that will progressively consume an increasing share of total central-government expenditures across the 2026–2040 window; (c) the post-2025 revenue-raising constraint imposed by the absence of cross-Strait-trade-revenue elasticity and the structural-tax-base limitations; (d) the historical pattern across post-2000 ROC budget cycles of defence-spending-elevation producing partial-but-incomplete revenue-raising response. The MOF position has been articulated in coordination with the Cho EY position while sustaining institutional-conservatism on the trajectory-acceleration question.

The Lai-pragmatist position, articulated through President Lai Ching-te's public-statement record across the 10 October 2025 ROC National Day address, the 1 January 2026 New Year address, and the Whole-of-Society Defence Resilience Committee quarterly-meeting addresses, has navigated between the strategic-demand pole (Hudson, Trump-2 administration) and the fiscal-constraint pole (MOF, sovereign-debt-sustainability orthodoxy). Lai's framing across 2025–2026 has positioned the trajectory-toward-3-per-cent commitment as both a strategic-deterrence-credibility signal and a sustainable-fiscal-trajectory commitment; the post-3-per-cent forward trajectory has been left rhetorically open while operationally constrained by the post-2025 budget-deliberation realities. The Lai position has been characterised by Ryan Hass (Brookings), Bonny Lin (CSIS), and Kharis Templeman (Hoover) as a "managed-acceleration" model — combining substantial defence-spending elevation with sustained fiscal-and-operational discipline — that differs in tonal-and-procedural respects from both the Hudson hawk model and the MOF orthodox model.

The cross-account synthesis on the defence-spending question is that the post-2025 trajectory toward 3 per cent of GDP has consolidated as the operative baseline of the Lai-Cho-Koo defence-budget architecture, with the higher Trump-2-articulated targets (5 per cent and 10 per cent) operating as bargaining-architecture pressure rather than achievable near-term fiscal trajectory. The Hudson hawk position has continued to push for accelerated movement above 3 per cent; the MOF fiscal-orthodox position has continued to resist further trajectory-acceleration without compensating revenue-raising measures; the Lai-pragmatist position has continued to navigate between the poles. The FY2027 budget cycle (opening September 2026) and the post-2027 Davidson Window assessment-update will constitute the next confirmable inflection points for the defence-spending-trajectory question.

5. The Constitutional Court Justice-Confirmation Paralysis Continuation

The Constitutional Court Justice-confirmation paralysis, originating in the post-October 2024 LY refusal to confirm Lai Ching-te's seven-Justice nomination package (treated in detail at TW-D-04), has continued through 2025 and into 2026 as the structural feature of the post-2024 inter-branch architecture. The operative Constitutional Court bench has remained at eight sitting Justices through the May 2026 cut-off, with the LY's continuing KMT-TPP-led refusal to confirm Lai's renominated Justice candidates sustaining the configuration that the Constitutional Judgment No. 2 of 2025 (114年憲判字第2號, 28 March 2025) [TBD-VERIFY exact case number and date] partial-strike-down restored to operative functionality. The eight-Justice bench composition has continued to operate under the post-Judgment No. 2 of 2025 operative framework in which the eight Justices can deliberate and rule on referred constitutional cases without being constrained by the December 2024 Constitutional Court Procedure Act amendment's elevated ten-Justice-quorum and nine-Justice-unconstitutionality thresholds.

The Lai government's renominations to the Justice vacancies across the post-March 2025 window have included renominations of Chang Wen-chen (張文貞), Yao Li-ming (姚立明), Liu Ching-yi (劉靜怡), and additional candidates [TBD-VERIFY exact post-March 2025 nomination roster — the published reporting through May 2026 should be referenced for the operative renomination sequence]. The LY's KMT-TPP-led non-confirmation pattern has continued through the September–December 2025 LY session and into the post-third-reading-passage window in January–May 2026. The KMT-TPP-LY-Caucus-articulated position has continued to be that Lai's renominations have failed to address LY-articulated concerns about ideological balance and judicial-independence credentials of named nominees, with particular reference to: (a) the perceived progressive-and-DPP-aligned policy-record of several nominees; (b) the perceived insufficient cross-Strait-and-national-security policy-record-and-judicial-restraint posture of several nominees; (c) the perceived insufficient academic-or-judicial-credentialling of several nominees for the constitutional-court-bench role. The DPP-EY-articulated position has continued to be that the LY's non-confirmation pattern constitutes deliberate constitutional-disablement of a co-equal branch, with the LY's refusal to engage in good-faith confirmation proceedings constituting the substantive constitutional-procedural-architecture violation.

The Executive Yuan's referral of LY-passed legislation to the Constitutional Court for review has proceeded under the eight-Justice configuration. Notable EY-referrals across 2025–2026 have included [TBD-VERIFY exact EY-referral chronology through May 2026]: the continuing review of the December 2024 Constitutional Court Procedure Act amendment's remaining (post-Judgment-No.-2-of-2025-partial-strike-down) provisions; the review of selected LY-passed legislation across the September 2025 – April 2026 LY session; and the consideration of whether to refer the FY2026 budget-passage for partial-unconstitutionality review on the basis of any KMT-TPP-imposed cuts to constitutionally-mandated expenditure lines. The eight-Justice bench's adjudication tempo across 2025–2026 has continued at reduced capacity relative to the constitutional-design fifteen-Justice configuration, with the post-2025 docket of EY-referred cases producing a sustained backlog of pending adjudications.

The Yu-Jie Chen (陳玉潔, Academia Sinica Institutum Iurisprudentiae) sustained commentary across 2025–2026 has positioned the Constitutional Court Justice-confirmation paralysis within the broader post-democratisation constitutional-procedural-architecture context. Chen's analysis has emphasised: (a) the structural-novelty of the post-2024 LY-confirmation-refusal pattern relative to prior post-democratisation Justice-confirmation cycles, which had typically proceeded under broad inter-party consensus even under conditions of partisan-confrontation in other policy domains; (b) the comparative-democratic-cohabitation context within which the post-2024 confirmation-refusal pattern can be read against equivalent dynamics in the US (post-2016 Garland-Gorsuch sequence, post-2020 Barrett confirmation, post-2024 lower-court confirmation dynamics), Israel (post-2023 judicial-reform contestation), Hungary (post-2010 Fidesz constitutional-court-reform sequence), and Poland (post-2015 PiS constitutional-court-reform sequence); (c) the international-legal-and-comparative-constitutional-law implications for Taiwan's democratic-credibility-architecture in the post-2025 cross-Strait and US-Taiwan strategic context.

The Kharis Templeman (Hoover Institution) sustained commentary across 2025–2026 has analysed the Constitutional Court Justice-confirmation paralysis as the principal post-2024 structural feature of the divided-government architecture. Templeman's analysis has positioned: (a) the LY's refusal-to-confirm pattern as a legitimate-but-aggressive exercise of the LY's confirmation-authority that operates within the formal-constitutional framework while violating the post-democratisation inter-party comity norms; (b) the EY's continuing-renomination pattern as the appropriate constitutional-procedural response that maintains the EY's nomination-authority while accepting the LY's confirmation-authority; (c) the eight-Justice bench's continuing-operational capacity (under the post-Judgment No. 2 of 2025 framework) as the institutional safety-valve preventing complete constitutional-court paralysis. The Templeman-Yu-Jie-Chen analytical convergence has been that the post-2024 paralysis represents a structural-stress-test of the ROC constitutional architecture that has thus far been navigated without complete institutional collapse, with the continuing renomination-and-confirmation-refusal cycle as the operative-stalemate equilibrium through May 2026.

6. Cross-Strait Posture: Strait Thunder-2025 and the Continuing Grey-Zone Architecture

The post-Strait-Thunder-2025 cross-Strait pressure architecture has continued the post-2022 PLA grey-zone-pressure pattern at progressively elevated tempo across 2025–2026. The Strait Thunder-2025A exercise of April 2025 [TBD-VERIFY exact exercise designation and dates — the PLA Eastern Theatre Command's post-March 2025 exercise sequence has been reported across Reuters, Bloomberg, the ROC MND daily situational-reporting, and the CSIS China Power Project tracker under varying designations] operated as the PLA's response to the 13 March 2025 Lai Foreign Hostile Force designation and the Ten Measures implementation package. The Strait Thunder-2025B exercise of later 2025 [TBD-VERIFY exact exercise designation and dates] operated as the continuing-pressure-architecture exercise sequence cycle following the September 2025 budget-submission window and the October 2025 KMT-chair-handover. Together with the post-2022 Joint Sword exercise series — Joint Sword August 2022, Joint Sword April 2023, Joint Sword-2024A May 2024, Joint Sword-2024B October 2024 — the Strait Thunder-2025A/B exercises constitute the most-intensive PLA exercise tempo of the post-2022-Pelosi-visit era.

PLA grey-zone-pressure activities through 2025–2026 have included continuing median-line crossings by PLA Navy and PLA Air Force assets at elevated tempo relative to the 2023–2024 baseline. The ROC MND's PLA-aircraft ADIZ daily tracker, published via the MND X (Twitter) account from approximately September 2020 onwards, has documented a sustained-elevation pattern across 2025–2026 with monthly median-line crossing counts in the 200–400 range and monthly ADIZ-incursion counts in the 300–500 range [TBD-VERIFY exact monthly-by-monthly counts through May 2026]. The PLA Navy surface-combatant activity around Taiwan's surrounding waters has continued at elevated tempo, with sustained patrol-and-presence-operations in the East China Sea, the Taiwan Strait, and the Bashi Channel; the PLA Coast Guard activity around Kinmen, Matsu, and Pratas has continued at elevated tempo since the 14 February 2024 Kinmen boat-capsize incident aftermath. The post-Strait-Thunder-2025 exercise patterns have included blockade-rehearsal-and-decapitation-rehearsal exercise components reported by IISS, CSIS, and the ROC MND, with the Joint Sword-2024B October 2024 exercise sequence operating as the principal precedent for the post-2025 exercise-architecture innovation.

The post-March 2025 Ten Measures operationalisation has continued through 2025–2026. The cross-Strait people-flow restrictions on PRC entertainers and influencers — operationalised through the post-March 2025 MAC operational guidance documents and the Ministry of Culture and National Communications Commission coordination — have continued to constrain PRC-entertainer cross-Strait creative-industry engagements. The cross-Strait exchange-programme scrutiny — operationalised through the Ministry of Education's post-March 2025 due-diligence framework for primary, secondary, and tertiary educational institutions — has continued to constrain PRC-affinity-programme operations. The restored military-court jurisdiction in espionage cases — operationalised through the post-March 2025 MND-and-Ministry-of-Justice coordination framework — has continued to operate. The PRC-citizenship-renunciation enforcement — requiring naturalised ROC citizens of PRC origin to renounce PRC household-registration documentation — has continued to operate through 2025–2026 [TBD-VERIFY exact enforcement-action chronology through May 2026]. The cross-Strait subsea-cable infrastructure-protection upgrades — including the post-2025 satellite-redundancy programme acceleration via Eutelsat OneWeb and other non-Starlink providers and the reinforced-cable-and-monitoring programme operationalisation — have continued.

The post-2025 subsea-cable incidents have continued to generate cross-Strait-architectural friction. The February 2025 Pratas Channel suspicious-anchor-drag incident, involving the Cameroon-flagged Hongtai 58 vessel allegedly dragging its anchor across multiple subsea cables [TBD-VERIFY exact vessel name and flag], was followed by post-February 2025 cable-cut incidents in the Penghu, Pratas, and Taishi cable-system zones [TBD-VERIFY exact post-2025 subsea-cable incident chronology]. The post-2025 satellite-redundancy programme acceleration through Eutelsat OneWeb partnership has produced post-2025 LEO-satellite-internet-coverage operationalisation across Taiwan, providing the strategic-resilience architecture against potential cable-cut-driven communications disruption.

The Bonny Lin (CSIS), Ryan Hass (Brookings), Russell Hsiao (Global Taiwan Institute), and Wen-Ti Sung (Atlantic Council) sustained 2025–2026 commentary has characterised the post-Strait-Thunder-2025 architecture as a "sustained-coercion-without-direct-confrontation" model that maintains continuous-pressure on Taiwan while avoiding the kinetic-escalation threshold. The Lin-Hass-Hsiao-Sung analytical convergence has been that the post-2025 PLA exercise-tempo elevation represents a strategic-signalling-and-readiness-rehearsal architecture rather than a near-term invasion-preparation architecture, with the post-2027 Davidson Window assessment continuing to operate as the principal strategic-planning horizon. The PRC State Council Taiwan Affairs Office (TAO) framing through 2025–2026 has continued to position the Lai administration's post-March 2025 measures as evidence of "Lai Ching-te separatist provocations" requiring sustained-and-graduated PRC response; the TAO framing has been operationalised through sustained-rhetorical-confrontation across the Xinhua, CCTV, Global Times, and People's Daily channels.

The Lai administration's cross-Strait-policy positioning across 2025–2026 has continued the post-March 2025 Foreign Hostile Force designation operational architecture while maintaining the formal commitment to cross-Strait dialogue under conditions of PRC engagement. President Lai's 10 October 2025 ROC National Day address articulated the continuing Republic of China Taiwan (中華民國台灣) constitutional-identity framework (treated in detail at TW-D-05) while reaffirming the Foreign Hostile Force designation and the Ten Measures implementation. The 1 January 2026 New Year address continued this framework articulation. The Whole-of-Society Defence Resilience Committee quarterly-meeting addresses across 2025–2026 have operationalised the post-July 2024 architecture through the post-March 2025 Ten Measures integration.

7. Defence Procurement: Submarine Hai Kun, Sky Bow Air-Defence Integration, and FMS Pipeline

The defence-procurement architecture funded through the FY2026 budget submission constitutes the operational substance of the Lai administration's mid-term defence-spending trajectory. Three principal procurement-track threads — the indigenous-submarine Hai Kun (海鯤) programme, the Sky Bow (天弓, Tien Kung) III air-defence-missile integration into the layered air-and-missile-defence architecture, and the continuing Foreign Military Sales (FMS) pipeline — together account for the substantial-majority of the FY2026 defence-modernisation-tranche allocations.

The Hai Kun programme — the indigenous submarine prototype unveiled at the CSBC Corporation Kaohsiung shipyard in September 2023 and undergoing sea trials across 2024–2026 — has progressed through 2025–2026 toward the projected mass-production-batch funding tranche. The Hai Kun prototype, designated SS-711 and named Narwhal (海鯤, Hai Kun) under the "Indigenous Defense Submarine" (IDS, 國艦國造) programme launched in 2014 under President Ma Ying-jeou and accelerated under President Tsai Ing-wen from 2016 onwards, represents the first indigenous-built submarine in the ROC Navy's order-of-battle. The September 2023 unveiling was followed by harbour acceptance trials in 2024 and sea acceptance trials extending across 2024–2026. The post-prototype-trials follow-on-batch acquisition envelope — targeting an initial follow-on batch of approximately seven additional submarines under the post-2026 mass-production programme [TBD-VERIFY exact follow-on-batch composition and funding-line-by-funding-line allocation in the FY2026 budget submission] — would, if fully funded across the FY2026–FY2032 budget cycles, produce a post-2032 indigenous-submarine-fleet baseline of eight submarines, displacing the legacy Hai Lung (海龍) class Zwaardvis-derived submarines (delivered 1987–1988 by the Netherlands) and the Guppy II Hai Shih (海獅) class submarines (US-origin, World War II era, retained for training purposes).

The Sky Bow III air-defence missile, produced by the National Chung-Shan Institute of Science and Technology (NCSIST, 國家中山科學研究院), has continued through 2025–2026 to integrate into the layered air-and-missile-defence architecture alongside the US-supplied Patriot PAC-3 MSE systems, the legacy Hawk and Sky Bow II systems, and the post-2023 announced NASAMS package. The Sky Bow III system — an indigenous-developed long-range surface-to-air missile with reported capabilities against high-altitude ballistic-and-cruise-missile threats — represents the apex tier of the indigenous air-defence-missile architecture and operates in coordination with the Sky Sword (天劍, Tien Chien) air-launched air-to-air missile family produced by NCSIST. The FY2026 budget submission includes [TBD-VERIFY exact FY2026 Sky Bow III funding-line] continuing production-and-integration funding for the Sky Bow III programme.

The FMS pipeline through 2025–2026 has continued the post-2017 elevated-FMS-tempo characteristic of the Trump-1 and Biden administrations and has been sustained under Trump-2. Notable FMS-pipeline elements include: (a) the F-16V Block 70/72 programme — the 66-aircraft order announced August 2019 (approximately US$8 billion) and progressively delivered through the 2024–2026 window with completion projected by approximately end-2026; the post-2024 delivery sequence has been reported by Lockheed Martin and the ROC Air Force as proceeding on schedule subject to supply-chain-driven adjustments; (b) the M1A2T Abrams main battle tank programme — the 108-tank order announced July 2019 (approximately US$2 billion) with delivery sequence across 2024–2026; (c) the HIMARS rocket-system programme — the October 2020 announced package and subsequent follow-on packages, with delivery sequence across 2024–2026; (d) the AGM-84L Block II Harpoon Coastal Defence System programme — the December 2022 announced 400-missile-plus-100-launcher package (approximately US$2.37 billion) with delivery extending through 2028; (e) the AIM-120D AMRAAM air-to-air missile programme — multiple packages 2019–2024 with sustained delivery sequence; (f) the Stinger MANPADS programme — multiple packages 2019–2024 with sustained delivery sequence; (g) the NASAMS air-defence-system programme — the 2023 announced package with delivery sequence across 2025–2027; (h) the Volcano anti-tank-mine programme — the 2023 announced package; (i) the MQ-9B SeaGuardian UAS programme — the December 2020 announced four-aircraft package; (j) post-2025 announced packages [TBD-VERIFY exact post-March 2025 FMS-package announcement dates, dollar magnitudes, and weapon-systems composition — the Defense Security Cooperation Agency congressional-notification archive provides the operative reference set].

The FY2026 defence-budget submission's allocation across personnel, force-modernisation, indigenous-development, and FMS-acquisition tranches has continued the post-2024 asymmetric-defence-procurement architecture inherited from the Tsai administration and the Lee Hsi-min (李喜明) Overall Defense Concept (整體防衛構想, Zhengti Fangwei Goouxiang) doctrinal framework (treated in detail at TW-F-04). The post-2024 MND under Wellington Koo's civilian-Minister leadership has continued to elevate the priority of asymmetric capabilities — coastal-defence missiles, sea-mine and unmanned-surface-vessel capabilities, MANPADS-and-Stinger man-portable air-defence, and distributed-resilient C4ISR architecture — alongside the legacy-platform programmes (F-16V, M1A2T, NASAMS). The KMT-TPP-LY-Caucus position across the FY2026 budget deliberation cycle has continued the post-2024 pattern of questioning specific FMS-pipeline-line items (particularly questioning the M1A2T programme's asymmetric-defence-relevance) while broadly sustaining the overall defence-budget-line magnitude.

The Su Tzu-yun (蘇紫雲, INDSR Division Head for Defence Strategy and Resources) sustained 2025–2026 defence-budget analysis has positioned the FY2026 submission within the post-2017 defence-budget trajectory documented in TW-F-04. Su's analysis has emphasised: (a) the post-2024 defence-budget growth pace acceleration relative to the 2017–2022 baseline; (b) the post-2025 elevated Hai Kun and indigenous-development tranche relative to the pre-2024 baseline; (c) the post-2025 sustained FMS-pipeline tranche supporting the legacy-platform-acquisition trajectory; (d) the post-2025 elevated personnel-and-training tranche supporting the post-2024 conscription-extension-to-twelve-months operational requirements.

8. Trump-2 Tariff Architecture and the TSMC Arizona-Kumamoto-Dresden Expansion Narrative

The Trump-2 administration's post-April 2025 reciprocal-tariff regime and the parallel Section 232 semiconductor investigation together constitute the parallel economic-pressure-track operating alongside the defence-spending-demand track on Taiwan. The 2 April 2025 Liberation Day tariff announcement initially placed a 32-per-cent reciprocal-tariff rate on Taiwan goods exports to the US — calculated under the Trump-2 administration's reciprocal-tariff methodology incorporating bilateral-trade-deficit-to-bilateral-exports ratios — with the rate placing Taiwan in the elevated-tariff tier alongside South Korea, Japan, the European Union, and several Southeast Asian economies. The 9 April 2025 ninety-day pause, applied across the Trump-2 administration's reciprocal-tariff partners other than China, opened a negotiating window during which Taiwan and other affected jurisdictions sought to negotiate post-pause tariff modifications.

The post-9-April-2025 USTR-Taiwan negotiating-track activity has continued through the post-90-day-pause extension cycles and into May 2026. The Taiwan-side negotiating-team has been led by Vice Premier Cheng Li-chiun (鄭麗君) in her Office of Trade Negotiations (OTN, 行政院經貿談判辦公室) lead role, with Minister of Economic Affairs Kuo Jyh-huei (郭智輝) [TBD-VERIFY exact tenure status through May 2026], and the OTN-team composition including senior career-trade-negotiating officials. The Taiwan-side negotiating-offer architecture has emphasised: (a) Taiwan procurement-offer enhancement including post-2025 US-agricultural-product procurement, post-2025 US-energy-product procurement (including LNG), and post-2025 US-defence-acquisition procurement; (b) post-2025 Taiwan-investment-in-the-US elevation including the TSMC Arizona expansion and other Taiwan-corporate investment commitments; (c) post-2025 Taiwan-market-access-for-US-goods enhancement across selected sectors; (d) post-2025 Taiwan-export-control-alignment with the US Bureau of Industry and Security framework on advanced-technology export controls. The USTR-side negotiating-position has emphasised: (a) bilateral-trade-deficit reduction; (b) post-2025 US-investment-in-Taiwan reciprocity; (c) post-2025 US-supply-chain-resilience requirements particularly in semiconductors; (d) post-2025 Taiwan-export-control-alignment requirements.

The Section 232 semiconductor investigation, initiated under the Trump-2 administration's Department of Commerce framework, has produced findings [TBD-VERIFY exact Section 232 report-publication date — the published reporting through May 2026 should be referenced for the operative findings-and-recommendation timeline] and has operated as the proximate basis for any semiconductor-specific tariff actions under the Trump-2 architecture. The Section 232 framework permits the imposition of tariffs on imports where the Commerce Department determines that imports threaten US national security; the post-2025 Section 232 semiconductor investigation findings have addressed: (a) US-semiconductor-supply-chain dependence on Taiwan-sourced fabrication; (b) US-semiconductor-supply-chain dependence on Korea-sourced fabrication (Samsung Foundry); (c) US-semiconductor-supply-chain resilience requirements; (d) US-Taiwan and US-Korea procurement-and-investment offsets. The post-Section-232 semiconductor-specific tariff structure has remained in continuing negotiation through May 2026, with the post-pause USTR-Taiwan track and the post-Section-232 Commerce-Department track operating in parallel.

The TSMC Arizona-Kumamoto-Dresden expansion narrative — operationalised through TSMC's progressive build-out of fabrication facilities outside Taiwan — has been treated by both the Trump-2 administration and the Lai administration as the principal procurement-offer-and-strategic-positioning architecture for the post-2025 US-Taiwan economic relationship (treated in detail at TW-D-03 and TW-G-01). The TSMC Arizona Phoenix campus — initiated under the December 2020 announced US$12 billion investment and progressively expanded through the post-2024 Biden CHIPS-and-Science-Act and post-2025 Trump-2 negotiating-track increments — has comprised Fab 21 Phase 1 (4nm process, in production from late 2024), Fab 21 Phase 2 (3nm process, on schedule for 2026–2027 production), Fab 21 Phase 3 (2nm process, on schedule for late-2020s production), and post-2025 announced additional phases including Phase 4, Phase 5, and Phase 6 [TBD-VERIFY exact post-2025 Arizona expansion phase-by-phase status]. The TSMC Kumamoto Japan facility — operationalised through the Japan ASML-and-Sony-co-investment Japan Advanced Semiconductor Manufacturing (JASM) joint venture — has comprised JASM Fab 1 (28nm/22nm/16nm/12nm processes, in production from late 2024) and JASM Fab 2 (under construction, projected production from 2027). The TSMC Dresden European Semiconductor Manufacturing Company (ESMC) joint venture — operationalised through the Germany ASML-and-Infineon-and-Bosch-co-investment framework — has been under construction with projected production from approximately 2027 onwards.

The TSMC Arizona-Kumamoto-Dresden expansion narrative has been positioned across 2025–2026 as both the strategic-resilience architecture for the global-semiconductor-supply-chain (de-risking from a single Taiwan-concentration baseline) and the procurement-offer-enhancement architecture for the US-Taiwan negotiating-track. The Lai administration's positioning of the TSMC expansion has been to emphasise: (a) the continued Taiwan-headquartered TSMC R&D-and-most-advanced-process retention (with the post-2025 most-advanced-node — N2 and post-N2 — remaining headquartered in Taiwan); (b) the post-2025 Taiwan-domestic-semiconductor-investment continuity including TSMC, UMC, and the broader semiconductor-ecosystem investment-pipeline; (c) the post-2025 strategic-deterrence-architecture compatibility of the TSMC overseas-expansion (the "silicon shield" framing operating under the modified-architecture where global-supply-chain-distribution does not eliminate the Taiwan-concentration strategic-deterrence weight). The KMT-position framings across 2025–2026 have continued the post-2024 critique that the TSMC overseas-expansion-at-elevated-pace risks weakening the silicon-shield strategic-deterrence architecture; the DPP-position framings have continued to emphasise the strategic-resilience-and-procurement-offer logic of the managed-expansion architecture.

9. Energy Policy: Pingtung LNG Versus KMT Nuclear-Revival Confrontation

The energy-policy confrontation between the Lai/Executive-Yuan Pingtung Liquefied-Natural-Gas (LNG) terminal positioning and the post-October 2025 KMT nuclear-revival push has emerged as a structural domestic-policy axis cross-cutting the budget-deliberation and 2026-election-positioning architectures. The Lai administration's energy-policy positioning has continued the 2016-Tsai-era nuclear-phase-out trajectory toward the original 2025 nuclear-free homeland (非核家園, Feihe Jiayuan) target, partially adjusted under post-2024 operational-and-strategic-resilience considerations. The 2016-Tsai-era electricity-generation-mix target — 50 per cent natural gas, 30 per cent coal, 20 per cent renewables, and 0 per cent nuclear by 2025 — has across 2025–2026 been partially adjusted to accommodate operational realities including the post-2024 grid-stability requirements, the post-2024 semiconductor-industry power-demand growth, and the post-2025 strategic-resilience considerations.

The Pingtung Third LNG Terminal (台電第三天然氣接收站, Taidian Disan Tianranqi Jieshouzhan) — operationalised through Taiwan Power Company (Taipower, 台灣電力公司) at the Pingtung southern-Taiwan offshore site following the December 2021 referendum that confirmed the project's continuation against opposition challenge — has continued to construct through 2025–2026. The Taipei post-2025 LNG-import infrastructure has continued to expand with the post-2025 elevated LNG-procurement-from-US framework operating as a procurement-offer component of the USTR-Taiwan negotiating-track. The post-2025 offshore-wind capacity build-out — operationalised through the Round 3 zonal-development framework awarded under the Ministry of Economic Affairs Bureau of Energy framework — has continued through 2025–2026 with sustained installed-capacity additions in the post-2025 window. The post-2025 solar-energy capacity build-out has continued through 2025–2026 with sustained installed-capacity additions across the post-2025 framework.

The Ma Anchu Number 3 reactor (馬鞍核三廠, Maan He San Chang), Number 2 reactor (核二廠), and Number 1 reactor (核一廠) decommissioning sequence had been the operational baseline of the pre-2025 nuclear-phase-out trajectory. The Number 1 reactor — Jinshan Nuclear Power Plant, located in New Taipei City — had been decommissioned across 2018–2019. The Number 2 reactor — Kuosheng Nuclear Power Plant, located in New Taipei City — had been decommissioned across 2021–2023. The Number 3 reactor — Maanshan Nuclear Power Plant, located in Pingtung County — had entered the cold-shutdown decommissioning sequence in 2024–2025 following the expiration of its forty-year operating licence. The Number 4 reactor — Lungmen Nuclear Power Plant, located in New Taipei City — had been mothballed indefinitely following the post-Fukushima 2014 sealing decision and had not entered operational service.

The post-October 2025 KMT-chair-tenure's renewed advocacy for nuclear-revival has produced a sharp domestic-policy contestation. The KMT-position framings across late 2025 and 2026 have advanced: (a) extension-of-operating-life proposals for the Number 3 reactor (currently in cold-shutdown decommissioning) under the framing that the post-cold-shutdown reactivation is operationally feasible; (b) exploration of new-build reactor advocacy under the framing that the post-2025 semiconductor-industry power-demand growth and the post-2025 strategic-resilience considerations require a sustained-baseload-nuclear-generation architecture; (c) reassessment of the Number 4 reactor (Lungmen) mothball status under the framing that the post-2025 strategic-environment-shift warrants reconsidering the post-Fukushima sealing decision. The KMT-position has been articulated across the post-October 2025 KMT-chair-public-statement record, the KMT-LY-Caucus legislative-position record, and the KMT-affiliated think-tank (including the National Policy Foundation, 國家政策研究基金會) policy-output record.

The DPP-Executive-Yuan position across 2025–2026 has continued the post-2016 nuclear-phase-out commitment while accommodating selected operational-flexibility-adjustments. The post-2025 nuclear-policy referendum-or-legislation pathways — including the question of whether the post-2025 KMT-TPP-LY-Caucus could advance amendments to the Renewable Energy Development Act (再生能源發展條例) and the Atomic Energy Act (原子能法) framework or could initiate a post-2025 nuclear-policy referendum under the Referendum Act (公民投票法) — have remained uncertain through May 2026 [TBD-VERIFY exact post-2025 nuclear-policy referendum-or-legislation status]. The post-2025 referendum-thresholds — set at 25 per cent of eligible voters voting yes for passage — provide a substantial-procedural-bar to any post-2025 referendum-based nuclear-revival pathway.

10. Foreign-Policy Continuity: Wellington Koo, Lin Chia-lung, and the US-Japan-Korea Architecture

The foreign-policy continuity under Defence Minister Wellington Koo (顧立雄) and Foreign Minister Lin Chia-lung (林佳龍), continuing through 2025–2026, has sustained the post-2024 US-Taiwan-arms-and-strategic-coordination architecture, the semi-official Taiwan-Japan-Korea coordination architecture, and the post-2025 bilateral-relations continuity across the European, Indian, and Latin American tracks.

MND Minister Wellington Koo — the first civilian Defence Minister in approximately fourteen years, appointed May 2024 — has continued through May 2026 [TBD-VERIFY exact tenure status through May 2026]. Koo's pre-MND background as a senior administrative lawyer (1962-born, NTU Law graduate, post-2016 Financial Supervisory Commission Chair, post-2020 Director of the National Security Council, post-2022 Mainland Affairs Council Chair) provided the civilian-credentialling baseline for the post-May 2024 transition to civilian MND leadership. The MND under Koo has across 2025–2026 continued the post-2024 asymmetric-defence-procurement operational architecture and the post-March 2025 Whole-of-Society Defence Resilience Committee operationalisation. Koo's working relationship with the US Department of Defense — including with the Trump-2 Secretary of Defense, the Trump-2 Indo-Pacific Command leadership, and the Trump-2 Department of Defense Office of Indo-Pacific Security Affairs — has across 2025–2026 sustained the operational US-Taiwan-arms-and-strategic-coordination architecture across the FMS-pipeline, the post-2025 announced-package sequence, and the post-2025 elevated arms-transfer tempo.

MOFA Minister Lin Chia-lung — former Taichung Mayor 2014–2018, former Minister of Transportation 2019–2022, MOFA Minister from May 2024 — has continued through May 2026 [TBD-VERIFY exact tenure status through May 2026]. The MOFA under Lin has across 2025–2026 continued the post-2024 New Southbound Policy (新南向政策, Xinnan Zhengce) operationalisation, the post-2024 European-bilateral-track expansion, the post-2024 India-and-Latin-America bilateral-track operationalisation, and the post-2024 multilateral-organisation engagement architecture. The MOFA under Lin has continued to coordinate with the National Security Council under Secretary-General Joseph Wu (吳釗燮, MOFA Minister 2018–2024 and subsequent NSC Secretary-General) on the post-2025 strategic-diplomatic-architecture.

The US-Taiwan bilateral relationship through 2025–2026 has operated through the American Institute in Taiwan (AIT) on the US side and the Taipei Economic and Cultural Representative Office in the United States (TECRO) on the Taiwan side. The AIT Director through 2025–2026 has continued to be the operational US-Taiwan diplomatic-coordination conduit; the TECRO Representative through 2025–2026 has continued to be the operational Taiwan-US diplomatic-coordination conduit [TBD-VERIFY exact post-2025 AIT Director and TECRO Representative identities]. The US-Taiwan AIT-TECRO architecture has continued to operate under the Taiwan Relations Act (TRA, 1979), the Six Assurances (1982), and the post-2018 Taiwan Travel Act and Taipei Act (2020) framework. The Trump-2 administration's Taiwan-related senior-official statements through 2025–2026 have sustained the operational US-Taiwan strategic-architecture while pressing the defence-spending-and-tariff tracks.

The Taiwan-Japan strategic alignment through 2025–2026 has operated through the semi-official Japan-Taiwan Exchange Association (公益財団法人日本台湾交流協会) on the Japan side and the Taipei Economic and Cultural Representative Office in Japan (TECRO Japan) on the Taiwan side. The Taiwan-Japan strategic alignment under the post-2024 Ishiba Shigeru (石破茂) LDP administration and the post-2025 LDP-leadership-trajectory architecture (treated in detail at JP-F-04 and JP-F-05) has continued to operate at elevated tempo relative to the pre-2022 baseline, with sustained-coordination on the post-2025 cross-Strait architecture, the post-2025 semiconductor-supply-chain architecture, the post-2025 PLA-pressure-tempo response, and the post-Fukushima-discharge cross-Strait-implications track. The Lin-Iwaya Takeshi (岩屋毅, Japan MOFA Minister from October 2024) and Lin-Iwaya-successor coordination architecture has continued through 2025–2026.

The Taiwan-Korea bilateral relationship through 2025–2026 has operated through the Korea Taipei Mission in Taipei on the Korea side and the Taipei Mission in Korea on the Taiwan side. The post-1992 Korea-Taiwan unofficial-relations architecture — following Korea's 1992 normalisation with the PRC and consequent de-recognition of the ROC — has continued under sustained-pragmatic engagement through 2025–2026. The semi-official Taiwan-Japan-Korea trilateral coordination — operating through track-1.5 and track-2 channels and through selected post-2024 official-coordination openings — has continued at elevated tempo relative to the pre-2024 baseline, with the post-2024 Yoon-Suk-yeol-administration-and-Lee-Jae-myung-administration trajectory in Korea (the May 2025 Korean presidential election produced Lee Jae-myung's victory and the post-June 2025 Lee Jae-myung presidency) [TBD-VERIFY exact post-2025 Korea-Taiwan engagement architecture under the Lee Jae-myung administration] shaping the post-2025 Korea-Taiwan-track architecture.

The Holy See (Vatican) diplomatic-continuity question — Taiwan's only formal European diplomatic ally and a structurally-critical institutional anchor — has continued through 2025–2026 as a structural-uncertainty under the post-2018 Vatican-PRC provisional-agreement-on-bishop-appointments framework. The Vatican-PRC provisional agreement, initially concluded in September 2018 and renewed in 2020, 2022, and 2024 under two-year cycles, has been positioned by Vatican commentators as the principal-architecture under which the Vatican-PRC normalisation pathway operates [TBD-VERIFY post-2024 Vatican-PRC provisional-agreement renewal status — the published reporting indicates that the post-2024 renewal cycle has continued]. The Vatican-Taiwan diplomatic-continuity has across 2025–2026 sustained the formal-recognition relationship through the Holy See's apostolic-nuncio architecture, though the post-2025 Holy See-PRC architectural trajectory has remained a continuing source of post-2025 diplomatic-architectural concern for the Lai administration.

The post-2025 bilateral-tracks across the broader European-Indian-Latin-American architecture have continued under sustained operational engagement. The India Taipei Economic and Cultural Centre programme expansion has continued, with the post-2025 Taiwan-India trade-and-technology cooperation framework operating across the New Southbound Policy architecture and the post-2025 Taiwan-corporate India-manufacturing-investment trajectory (including the post-2025 Foxconn India and PSMC India semiconductor-fabrication projects) [TBD-VERIFY exact post-2025 Taiwan-India semiconductor-investment status]. The Lithuania Taiwan Representative Office — established November 2021 under the post-2021 Lithuania-Taiwan elevated-engagement framework that triggered PRC retaliation — has continued to operate through 2025–2026. The Slovakia and Czechia bilateral programmes — operating through sustained parliamentary-and-economic engagement including the Czechia Senate Speaker visit programme continuation and the Slovakia-Slovenia bilateral programme — have continued through 2025–2026. The Paraguay diplomatic-relations preservation — Taiwan's only South American diplomatic ally — has continued through 2025–2026 under sustained Paraguay-government engagement.

The WHO-observership-blocked status (continuous since 2017 under PRC objection following the post-2016 Tsai-era recalibration) has continued through the 2025 World Health Assembly (May 2025) and the 2026 World Health Assembly (May 2026), with Taiwan's continuing non-observer status sustained. The ICAO blocked-status (continuous since 2014 under PRC objection) has continued through 2025–2026. The INTERPOL blocked-status and the UNFCCC blocked-status have continued through 2025–2026. The semi-official side-arrangements — including informal bilateral-engagement during the WHA, ICAO Assembly, and other multilateral cycles — have continued to provide the operational substitute for formal-participation.

11. The Lai Approval-Rating Trajectory and the 2026 Nine-in-One Positioning

The Lai Ching-te approval-rating trajectory across 2025–2026 has stabilised in the 35–45-per-cent satisfaction range across the principal monthly tracking polls. The Taiwan Public Opinion Foundation (台灣民意基金會, You Ying-lung 游盈隆 Chairman), the TVBS Poll Centre, the ETtoday Survey Centre, the My-Formosa (《美麗島電子報》) monthly tracking poll, the TISR (Taiwan Indicator Survey Research, 台灣指標民調), and the Election Study Centre at National Chengchi University (政治大學選舉研究中心) longitudinal tracking polls together provide the operative-reference reading-set for the Lai approval-rating trajectory.

The Lai approval trajectory has moved through three distinguishable phases across 2024–2026. The post-inaugural elevated-approval phase across May–October 2024 produced satisfaction-rate readings in the 50-per-cent range, reflecting honeymoon-period dynamics and the cross-Strait-stability bonus from the 20 May 2024 inaugural. The post-October-2024-constitutional-court-paralysis-and-January-2025-budget-cut decline phase across November 2024 – March 2025 produced satisfaction-rate declines into the 35–40-per-cent range, reflecting the impact of the May–October 2024 Guohui Gaige constitutional-contest, the December 2024 Constitutional Court Procedure Act amendment, and the January 2025 budget-cut sequence. The post-March-2025-Foreign-Hostile-Force-designation-and-post-recall stabilisation phase across April 2025 – May 2026 has produced satisfaction-rate readings in the 38–45-per-cent range, with sustained-stabilisation across the post-recall window [TBD-VERIFY exact monthly-tracking-poll readings through May 2026].

The principal-disapproval drivers across 2025–2026 have included: (a) the post-2024 cross-Strait-pressure-tempo elevation perceived by approximately 30–40 per cent of respondents as evidence of inadequate cross-Strait-stability-management; (b) the post-2024 KMT-TPP-LY-Caucus-driven budget-cut-and-procedural-confrontation perceived by approximately 25–35 per cent of respondents as evidence of inadequate inter-party-coordination on the part of the Lai administration; (c) the post-2025 Trump-2 tariff-and-defence-spending-pressure perceived by approximately 25–35 per cent of respondents as evidence of inadequate US-Taiwan-relationship management. The principal-approval drivers across 2025–2026 have included: (a) the post-March 2025 Foreign Hostile Force designation perceived by approximately 50–60 per cent of respondents as appropriate response to PRC pressure; (b) the post-2025 Hai Kun submarine programme and the post-2025 elevated defence-spending tranche perceived by approximately 45–55 per cent of respondents as appropriate strategic-resilience investment; (c) the post-2025 TSMC Arizona-Kumamoto-Dresden expansion narrative perceived by approximately 40–50 per cent of respondents as appropriate strategic-economic positioning [TBD-VERIFY exact polling readings on these specific drivers].

The 2026 Nine-in-One local-elections scheduled for 21 November 2026 (treated in detail at TW-D-05) constitute the next institutional inflection point for the Lai approval-rating trajectory and the broader DPP-mid-term-electoral-positioning architecture. The Nine-in-One framework — covering the six special-municipality mayoralties (Taipei, New Taipei, Taoyuan, Taichung, Tainan, Kaohsiung), thirteen county-magistrate and city-mayor races outside the special municipalities, the special-municipality and county-and-city councils, the township-and-rural-district mayoralties, the township-and-rural-district councils, the village-and-borough chiefs, and the special-municipality indigenous-district council positions — operates as the most-comprehensive mid-term electoral assessment of Taiwanese democratic government. The 2022 Nine-in-One election produced a KMT 13-mayoralty / DPP 5-mayoralty / TPP 1-mayoralty (Hsinchu City) baseline that the 2026 cycle will revisit; the post-recall 2025 polling and the post-October 2025 KMT-chair-election cycle have shaped the candidate-recruitment-and-campaign-positioning architecture across all five major parties (KMT, DPP, TPP, NPP, TSP) and the smaller-party-and-independent fringe.

The 2026 Nine-in-One contested-mayoral-races include: Taipei (incumbent Chiang Wan-an 蔣萬安, KMT, seeking re-election against DPP and TPP challengers); New Taipei (open-seat following Hou You-yi's 侯友宜 term-limit, with DPP, KMT, and TPP candidates competing); Taichung (incumbent Lu Hsiu-yen 盧秀燕, KMT, seeking re-election against DPP and TPP challengers); Taoyuan (post-Cheng Wen-tsan 鄭文燦 and post-Chang San-cheng 張善政 configuration with KMT-incumbent Chang San-cheng seeking re-election); Kaohsiung (incumbent Chen Chi-mai 陳其邁, DPP, seeking re-election); and Tainan (post-Huang Wei-cher 黃偉哲 term-limit with DPP-incumbent term-limited, open-seat with DPP and KMT candidates competing). The Taipei race in particular has been positioned as the principal 2026 Nine-in-One contest and as the principal-early-2028-presidential-positioning anchor for Chiang Wan-an (treated in detail at TW-D-05).

12. Contested Readings: Three-Account Synthesis

The post-recall FY2026 budget cycle and the broader Lai-administration mid-term trajectory have produced sustained interpretive contestation across three principal analytical axes. The three-account synthesis below presents each axis with its principal-account readings, without taking sides on the contested questions.

First axis: Is the KMT-TPP majority constitutional opposition or institutional sabotage? The KMT-TPP-account reading — articulated through the post-October 2025 KMT-chair public-statement record, the post-Huang-Kuo-chang TPP-chair public-statement record, the KMT-LY-Caucus and TPP-LY-Caucus position documentation, and the KMT-and-TPP-aligned commentary archive — positions the post-2024 KMT-TPP working-majority's exercise of legislative authority as legitimate constitutional-supervision of executive power. Under this reading: (a) the May–October 2024 Guohui Gaige legislative-reform sequence operationalised the LY's constitutional-authority to clarify and strengthen its supervision-and-investigation powers, consistent with parliamentary-democracy practice across comparator jurisdictions; (b) the December 2024 Constitutional Court Procedure Act amendment operationalised the LY's constitutional-authority over the procedural-rules of the constitutional court; (c) the January 2025 FY2025 budget-cuts-and-freezes and the September–December 2025 FY2026 budget-deliberation operationalised the LY's constitutional-authority over the central-government budget; (d) the post-2024 LY refusal to confirm Lai's Justice nominations operationalised the LY's constitutional-authority over Justice-confirmation. The DPP-governance-account reading — articulated through the Lai-Ching-te-Cho-Jung-tai public-statement record, the DPP-Central-Standing-Committee resolution documentation, and the DPP-aligned commentary archive — positions the same record as evidence of institutional sabotage of the democratic-constitutional architecture. Under this reading: (a) the Guohui Gaige sequence sought to enable LY-perpetrated political-confrontation rather than legitimate-supervision, as evidenced by the Constitutional Judgment No. 9 of 2024 strike-down of core provisions; (b) the Constitutional Court Procedure Act amendment sought to disable the constitutional-court's review function as a co-equal branch, as evidenced by the Constitutional Judgment No. 2 of 2025 partial-strike-down; (c) the FY2025 budget-cuts targeted democratic-defence-and-cross-Strait-resilience infrastructure rather than legitimate-fiscal-discipline; (d) the LY's confirmation-refusal pattern sought to disable the constitutional-court's adjudicative capacity. The non-partisan-academic-account reading — articulated through Yu-Jie Chen, Kharis Templeman, Lev Nachman, Nathan Batto, Wen-Ti Sung, and the broader academic-commentary archive — positions the same record as evidence of structural-stress-test of the post-2000-alternation institutional architecture under conditions of divided-government, with elements of both legitimate-supervision and institutional-confrontation operating simultaneously and with the post-recall moderation as evidence of the institutional-architecture's capacity for equilibrium-restoration without complete collapse.

Second axis: Is 3-5% defence spending necessary or excessive given fiscal constraint? The Hudson-hawk-account reading — articulated through Seth Cropsey, Iskander Rehman, the broader Hudson Taiwan-policy track, and the aligned commentary archive — positions the post-2025 defence-spending trajectory toward 3 per cent of GDP as insufficient and argues for accelerated movement above 3 per cent toward 5 per cent of GDP. Under this reading: (a) the post-2027 Davidson Window conflict-risk assessment requires sustained-and-elevated defence-spending as the strategic-deterrence-credibility prerequisite; (b) the post-2025 PLA exercise-tempo elevation and post-Strait-Thunder-2025 architecture demonstrates an elevated-near-term-pressure-and-conflict-risk environment; (c) the asymmetric-defence-procurement requirements and the post-2025 cyber-and-information-warfare architecture require sustained funding above the historical 2.0–2.5-per-cent baseline; (d) demonstrated Taiwan defence-commitment is a precondition for sustained US support under Trump-2. The MOF-fiscal-orthodox-account reading — articulated through Finance Minister Chuang Tsui-yun, the Budget, Accounting and Statistics Office, the National Treasury Administration, and the aligned commentary archive — positions any defence-spending acceleration above the 3-per-cent threshold as fiscally unsustainable without compensating revenue-raising measures. Under this reading: (a) the post-2025 sovereign-debt-to-GDP trajectory and the Public Debt Act statutory ceiling constrain the available fiscal-space; (b) the post-2025 demographic-decline-driven pension-and-social-welfare expenditure trajectory will progressively consume an increasing share of total central-government expenditures; (c) the post-2025 revenue-raising constraint imposed by the absence of cross-Strait-trade-revenue elasticity and the structural-tax-base limitations restricts the available revenue-side response. The Lai-pragmatist-account reading — articulated through President Lai Ching-te's public-statement record and the Cho-Jung-tai Executive-Yuan position — navigates between the strategic-demand pole and the fiscal-constraint pole, with the trajectory-toward-3-per-cent commitment as the operative response that combines strategic-deterrence-credibility-signalling with sustainable-fiscal-trajectory commitment.

Third axis: Is the Trump-Taiwan relationship transactional or structurally shifting? The DPP-cautious-account reading — articulated through the Lai-Ching-te public-statement record, the MOFA-Lin-Chia-lung public-statement record, and the DPP-aligned commentary archive — positions the post-2025 Trump-2 Taiwan-policy as transactional within a sustained-structural-architecture of US-Taiwan strategic commitment. Under this reading: (a) the post-2025 Trump-2 defence-spending-demand and tariff-architecture represent transactional-bargaining pressure rather than fundamental US-Taiwan-relationship reorientation; (b) the post-2025 US-Taiwan arms-transfer cycle has continued at elevated tempo, suggesting structural-commitment continuity; (c) the post-2025 Trump-2 administration's Taiwan-related senior-official statements have continued to articulate strategic-commitment-language alongside the transactional-pressure-language. The Hudson-strategist-account reading — articulated through Hudson Institute commentary, the post-2025 Heritage Foundation Taiwan-track, and the Project 2025-aligned commentary archive — positions the post-2025 Trump-2 Taiwan-policy as strategically committed but transactionally enforced. Under this reading: (a) the post-2025 Trump-2 administration's strategic-deterrence-commitment to Taiwan operates as a function of Taiwan's own demonstrated defence-commitment; (b) the post-2025 tariff-architecture operates as the economic-bargaining-instrument within a broader strategic-coordination architecture; (c) the post-2025 TSMC Arizona expansion operates as the economic-strategic-positioning architecture for the post-2025 US-Taiwan economic-security relationship. The KMT-sceptical-account reading — articulated through selected post-October 2025 KMT-chair public-statement record and the KMT-aligned commentary archive — positions the post-2025 Trump-2 Taiwan-policy as fundamentally transactional with reduced reliability relative to the post-1979 Taiwan Relations Act framework. Under this reading: (a) the post-2025 Trump-2 tariff-architecture demonstrates the structural-vulnerability of the Taiwan-export-dependence-on-US-market trajectory; (b) the post-2025 defence-spending-demand demonstrates the post-2025 conditional-character of the US security commitment; (c) the post-2025 strategic-uncertainty warrants a sustained cross-Strait-engagement-and-pragmatism positioning rather than over-reliance on the US-Taiwan relationship.

The integrative assessment across the three axes positions the post-recall FY2026-budget mid-term as a sustained-equilibrium configuration characterised by: (a) institutional-stress without institutional-collapse on the constitutional-procedural axis; (b) sustained-trajectory-toward-3-per cent of GDP on the defence-spending axis with continuing-tension between the strategic-demand and fiscal-constraint poles; (c) sustained-Trump-2-US-Taiwan strategic-architecture with continuing-transactional-bargaining tempo on the economic-and-defence-cooperation tracks. The November 2026 Nine-in-One local-elections and the FY2027 budget cycle (opening September 2026) constitute the next confirmable inflection points across all three axes.

13. External Sources and Bibliographic Detail

The principal-reference primary-source corpus for TW-D-06 comprises: (a) the Executive Yuan's Proposed Central Government General Budget for Fiscal Year 2026 (中華民國一一五年度中央政府總預算案) submitted September 2025 and the accompanying Budget Statement (預算總說明); (b) the Ministry of Finance's FY2026 Revenue and Tax Projections and FY2025 Outturn Estimates; (c) the Legislative Yuan's Procedural Record of the Eleventh Term Fourth and Fifth Sessions (第十一屆第四、五會期) covering September 2025 – May 2026; (d) the Ministry of National Defence's 2026 Defence Budget Brief and supporting documentation; (e) the Constitutional Court's Constitutional Judgment No. 2 of 2025 (114年憲判字第2號, 28 March 2025) [TBD-VERIFY exact case number] and post-2025 docket; (f) the Office of the President's public-speech archive September 2025 – May 2026 including the 10 October 2025 National Day address, the 1 January 2026 New Year address, and the 1 May 2026 second-anniversary assessment; (g) the Mainland Affairs Council's Cross-Strait Relations Quarterly Reports 2025–2026; (h) the Ministry of Foreign Affairs' Annual Foreign Affairs Report 2025.

The principal-reference US-government primary-source corpus comprises: (a) the Defense Security Cooperation Agency (DSCA) Foreign Military Sales notifications to Congress for Taiwan 2025–2026; (b) the Office of the United States Trade Representative (USTR) Taiwan-related tariff-actions documentation 2025–2026; (c) the Department of Commerce Section 232 semiconductor investigation findings; (d) the Department of State and American Institute in Taiwan public-statement record 2025–2026; (e) the Department of Defense annual report to Congress on Military and Security Developments Involving the People's Republic of China; (f) the post-2025 Trump-2 administration Taiwan-related senior-official statements through May 2026.

The principal-reference Taiwanese-media corpus comprises sustained 2025–2026 coverage across: Liberty Times (《自由時報》, pan-Green-leaning), China Times (《中國時報》, pan-Blue-leaning), United Daily News (《聯合報》, pan-Blue-leaning), Storm Media (《風傳媒》, mixed-orientation digital), Focus Taiwan / Central News Agency English service, Taipei Times (pan-Green-leaning English), Taiwan News (English), TaiwanPlus English service, Newtalk (《新頭殼》), Up Media (《上報》), and The Reporter (《報導者》).

The principal-reference international-media corpus comprises sustained 2025–2026 coverage across: Nikkei Asia (Cheng Ting-fang, Lauly Li, Thompson Chau, Taipei bureau), Bloomberg (Cindy Wang, Debby Wu, Taipei bureau), Reuters (Yimou Lee, Ben Blanchard, Taipei bureau), Financial Times (Kathrin Hille, Taipei bureau), Wall Street Journal (Joyu Wang, Taipei bureau), and The Economist.

The principal-reference scholarly-and-policy-commentary corpus comprises: (a) Brookings Institution Center for East Asia Policy Studies outputs by Ryan Hass, Richard C. Bush, Patricia Kim, and Mireya Solís; (b) Center for Strategic and International Studies (CSIS) outputs by Bonny Lin, Brian Hart, Matthew Funaiole, and Mark Cancian and the China Power Project tracker; (c) Hoover Institution outputs by Kharis Templeman and the Taiwan in the Indo-Pacific Region Programme; (d) Hudson Institute outputs by Seth Cropsey, Iskander Rehman, and the Hudson Taiwan-policy track; (e) Academia Sinica outputs by Yu-Jie Chen (Institutum Iurisprudentiae) and Nathan Batto (Institute of Political Science); (f) National Chengchi University outputs by Lev Nachman (post-2025 affiliation with Cornell University Brooks School of Public Policy [TBD-VERIFY]); (g) Atlantic Council Global China Hub outputs by Wen-Ti Sung; (h) Global Taiwan Institute outputs by Russell Hsiao via the Global Taiwan Brief; (i) New Bloom Magazine outputs by Brian Hioe; (j) the IISS The Military Balance 2026 edition and the Strategic Survey 2025–2026 Taiwan chapter; (k) RAND Corporation outputs by David Ochmanek, Michael Chase, Cortez Cooper, and the US-China Military Scorecard updates; (l) Western Michigan University outputs by Yuan-kang Wang.

The principal-reference polling-data corpus comprises monthly tracking-poll outputs from the Taiwan Public Opinion Foundation (台灣民意基金會, You Ying-lung 游盈隆 Chairman), the TVBS Poll Centre, the ETtoday Survey Centre, the My-Formosa (《美麗島電子報》) monthly tracking poll, the TISR (Taiwan Indicator Survey Research, 台灣指標民調), the Election Study Centre at National Chengchi University (政治大學選舉研究中心), and the Cross-Strait Interflow Prospect Foundation survey-research outputs through May 2026.

14. Conclusion and Forward View

The FY2026 budget cycle constitutes the second full-calendar-year budget cycle of the Lai Ching-te administration and the first post-recall budget cycle operating under the sustained-equilibrium configuration produced by the post-March 2025 Foreign Hostile Force designation, the May–August 2025 Great Recall vote-day sequence and its non-passage outcome, and the October 2025 KMT chair-election transition. The September 2025 EY submission, the September–December 2025 LY deliberation cycle, and the late-December 2025 third-reading-passage [TBD-VERIFY exact passage date] together produced a budget-reduction-and-freeze package substantially more moderate than the January 2025 NT$207.5-billion-plus aggregate, reflecting the post-recall political environment, the post-March 2025 cross-Strait-resilience-budget commitments, and the Trump-2 administration's continuing pressure for elevated Taiwan defence outlays.

The defence-spending-to-GDP-ratio trajectory from the FY2025 baseline of approximately 2.45 per cent to the FY2026 proposed level above 3 per cent (under the standard methodology) constitutes the first time in the post-2000 era that the Taiwanese defence-budget-line approached the 3-per-cent threshold and represents the operative Lai-Cho-Koo response to the Trump-2 defence-spending-demand. The Cho Jung-tai Executive Yuan position has across 2025–2026 sustained the trajectory-toward-3-per-cent commitment while resisting the higher Trump-2-articulated targets of 5 per cent and 10 per cent on fiscal-sustainability and operational-absorptive-capacity grounds. The Hudson-hawk position has continued to argue for accelerated movement above 3 per cent; the MOF-fiscal-orthodox position has continued to resist further trajectory-acceleration without compensating revenue-raising measures; the Lai-pragmatist position has continued to navigate between the poles.

The Constitutional Court Justice-confirmation paralysis has continued through 2025–2026 at the eight-sitting-Justice configuration sustained by the LY's continuing KMT-TPP-led refusal to confirm Lai's renominated Justice candidates. The post-Judgment No. 2 of 2025 operative functionality has permitted limited but constrained constitutional-court review of EY-referred cases; the structural-stalemate equilibrium has continued through May 2026 with no clear pathway to confirmation-restoration through the November 2026 Nine-in-One election cycle.

The post-Strait-Thunder-2025 cross-Strait pressure architecture has continued the post-2022 PLA grey-zone-pressure pattern at elevated tempo, with the Strait Thunder-2025A exercise of April 2025 and the Strait Thunder-2025B exercise of later 2025 [TBD-VERIFY exact exercise designations and dates] producing the most-intensive PLA exercise tempo of the post-2022-Pelosi-visit era. The post-March 2025 Ten Measures operationalisation has continued through 2025–2026 across the cross-Strait people-flow restrictions, exchange-programme scrutiny, military-court-jurisdiction restoration, citizenship-renunciation enforcement, and subsea-cable infrastructure-protection upgrades. The post-2025 subsea-cable incidents and the post-2025 satellite-redundancy programme acceleration via Eutelsat OneWeb have continued.

The forward trajectory through the November 2026 Nine-in-One local-elections (21 November 2026 vote day), the FY2027 budget cycle (opening September 2026), and the early 2028 presidential-cycle positioning constitutes the next set of confirmable institutional inflection points. The November 2026 Nine-in-One election outcomes will provide the principal mid-term electoral assessment of the Lai administration's first two-and-a-half years and will shape the early 2028 presidential-positioning landscape across the KMT (Chiang Wan-an, Lu Hsiu-yen, Hou You-yi), the DPP (Hsiao Bi-khim Vice-Presidency-to-presidential succession trajectory), and the TPP candidate-slate. The FY2027 budget cycle will operationalise the continuing-trajectory-toward-elevated-defence-spending question and will provide the post-2026-election operating baseline. The early 2028 presidential-cycle positioning will operationalise the post-recall-and-post-2026-election partisan-architecture.

The structural-political reading of the post-recall FY2026 budget cycle and the broader Lai-administration mid-term is that the constitutional-procedural impasse of 2024 and early 2025, the failed Great Recall campaign of mid-2025, and the post-recall continuing KMT-TPP-working-majority LY configuration have together produced the most-constrained DPP-executive operating environment of the post-2000 alternation era, while the cross-Strait deterrence-and-resilience architecture, the Trump-2 arms-transfer-and-tariff architecture, the TSMC Arizona-Kumamoto-Dresden expansion narrative, and the Republic of China Taiwan identity-framework consolidation have together produced a sustained DPP-strategic-positioning architecture. The post-recall mid-term constitutes a sustained-equilibrium configuration rather than a structural realignment, with the November 2026 Nine-in-One election cycle as the next confirmable inflection point. The integrative assessment across the three contested-readings axes positions the post-recall FY2026-budget mid-term as a structural-stress-test of the post-2000-alternation institutional architecture that has thus far been navigated without complete collapse, with the continuing institutional-stalemate equilibrium operating as the operative-baseline configuration through May 2026.

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