Taiwan announces special budget of $40 billion for arms purchases to bolster defence

Taiwan’s President Lai Ching-te said on Wednesday (November 26, 2025) he will put forth a special $40 billion budget for arms purchases, including building a Taiwan Dome, an air defence system with high-level detection and interception capabilities, in the face of U.S. pressure for the island to increase its defence spending.

The budget will be allocated over eight years, from 2026 to 2033, and comes after Mr. Lai already pledged to raise defence spending to 5% of the island’s GDP.

Currently, Taiwan has budgeted an increase in its defence budget to 3.3% for 2026, allocating TWD 949.5 billion ($31.18 billion).

Mr. Lai had previewed the announcement in an op-ed for the Washington Post on Wednesday (November 26), saying the special budget would be used to purchase arms from the U.S.

Wellington Koo, Taiwan’s Minister of National Defence, said on Wednesday (November 26) that the $40 billion is an upper limit for the special budget and that it will be used to buy precision-strike missiles and for the joint development and procurement between Taiwan and the U.S. of equipment and systems.