How the Iran War Exposed a Key U.S. Vulnerability No One Is Talking About

0:00 You already know that the Iran War has depleted U.S. stockpiles. You also already know that this is having an immediate effect on Ukraine’s ability to procure weapons from U.S. suppliers. You have further already heard about the concerns that Taiwan has about being properly defended in the event of a mainland invasion. And you may have further heard that, because the PRC is short on landing ships, at least the last of these concerns is still probably a couple of years away from starting to become a reality. But what has stayed out of the spotlight is what I am calling “the fundamental credibility problem of World War 3.” And it is a problem that the Iran War has exposed. It is a problem that will

0:47 compound the issues that Ukraine is facing. And it is a problem that does not have a simple solution. So join me today as we look at how the world that we currently live in could somehow get worse, as we discuss the difference between a low-hanging credibility problem and the credibility problem, followed by the microchip minigame that World War 3 will devolve into, how the United States might fix its credibility problem, and some further contingency plans if all else fails. Given the framing that I have discussed so far, you have likely sniffed out that I am referring to what happens after the PLA ships depart from the People’s Republic of China and make a beeline for Taiwan. Further, given that Trump is underlying the current predicament, you might think

1:34 that the fundamental credibility problem is his commitment to defending the island under those circumstances. Perhaps it is the sad state of U.S. inventories concerning you. Perhaps it is Trump’s capricious nature. Perhaps it is Trump’s unwillingness to put troops on the ground in a general sense. Perhaps it is Trump’s fondness for delicious hand-held Mexican favorites. Well, that is a credibility problem, but I do not think that it is the fundamental credibility problem. Indeed, there are a variety of counterpoints to those Trump-specific problems, which may partially calm some of the concerns. For one, China is the focus in the Pentagon behind the scenes, even if other issues grab the limelight. There is an important question of how much Trump’s dispositional attitude in Iran translates to

2:22 the Indo-Pacific. And there is the more physical point that stopping short in Iran may have been intended to keep something in reserve for a more strategically important region—namely, China. So, should there be concerns there? Yes. But they will only last for a few more years, and then someone else will come in. All of those problems personal to Trump will no longer be relevant. And with any luck, U.S. inventories will start to look a bit better. Rather, the credibility problem that I have in mind for today is so fundamental that it will carry over to any presidential candidate that may follow Trump. The core of the issue starts with a basic strategic point. The United States can only credibly threaten to intervene in Taiwan if participating in the war is better than

3:11 sitting it out. Tautological, I know, but it is worth thinking about the implications here. Why has Taiwan become such an obsession among the strategically-minded national security types? After all, it is a microscopic island on the grand scheme of things. Well, “micro” is the answer, as in microchips. I will spare you the rest of the story of how the world’s economy will collapse if Taiwan stops producing semiconductors, and global supply chains come grinding to a halt. And from that, you get the basic narrative of how the war is supposed to play out in theory. The PRC initiates an invasion. The United States panics, and begins flooding the Indo-Pacific with every resource available—which is hopefully more than what is sitting in the stockpiles in the immediate aftermath of the Iran War.

4:00 With any luck, the PLA fails to make landfall, and the global economic system remains intact. But let’s imagine that the war goes on just a bit longer. Or, alternatively, the United States is caught off guard by the whole thing. Maybe it just looked like the PRC was running exercises for the 67th time, but this time, they crossed the line. Now what? Well, the central issue here is that what makes an intervention better for the United States than the alternative is largely the economic situation. If the supply chains are still intact but otherwise in a holding pattern until it becomes safe for exports to restart, then there is a ton of value in continuing to protect the island. On the other hand, if the island quickly turns into a bunch of craters, then there is substantially

4:47 less value for the United States to protect at that point. A cold calculating president may therefore decide that the war is effectively over and refuse to intervene. And thus the Invasion of Taiwan morphs into a bizarre minigame over the island’s semiconductor manufacturing, where both sides sometimes have an incentive to save the technology but other times have an incentive to destroy it. Taiwan’s dilemma is a bit more straightforward. It wants to protect its semiconductor industry because that is why the island is rich. You don’t just kill the goose that lays golden eggs. The fact that the industry also keeps the United States invested in the island’s defense is the icing on the cake. Taiwan will therefore try to protect the industry as much as possible for as long as the mission stands a good chance of success.

5:37 However, Taiwan’s protection of its semiconductors is not absolute. If the war goes poorly, Taiwan will airlift all of its human capital, perhaps to resettle in Arizona. Taiwan will also start to sabotage all of its operations on the island. And it is easy enough to do that: the valuable machines are extremely sensitive. All you need is a person in each manufacturing room with a baseball bat, and everything will be worthless within an hour. I am sure that whoever conducts sabotage operations will have mixed feelings about the situation. On one hand, it is destroying so much human value; on the other, I am sure that it will feel good to get revenge on the PRC. No one on the island will want the mainland to profit from

6:22 those machines. Moreover, Taiwan is mountainous and ripe for an insurgency. The goal is to make the PRC staying as painful as possible. Removing semiconductor manufacturing is a big part of that. Turning to the PRC’s incentives, things start to get weird. The mainland would like to keep all of the machines intact, because money is nice. But the PRC also wants to put Taiwan under its control and fully complete the civil war that started 99 years ago. The United States stands in the way. Consequently, someone sitting in Beijing might conclude that it is a reasonable idea to go ahead and destroy all of Taiwan’s fabs from the start. Maybe that will keep the United States out of the war, thereby massively increasing the probability of a successful

7:10 invasion. A good chance at a lower value may be better than a bad chance at a high value. Okay, given that incentive structure, how does the United States fix the credibility problem? Well, the easiest solution is to just concede that there is no winning here. If the war starts, accept the fact that the semiconductor industry is a lost cause, and move on with your life. I mentioned Arizona earlier. It was not a random location. TSMC announced the plan to build an Arizona facility during the first Trump Administration. Construction began during the Biden Administration, and the facility has expanded under the second Trump Administration. Part of this is to have a contingency plan in place in case Taiwan becomes a bust. You can understand why the U.S. military in particular is keen to build a supply

7:59 chain that does not rely on a location 100 miles from the Chinese mainland. But conceding that the moment the war starts may be the moment that the war is lost from the U.S. perspective does not mean that Washington faces a hopeless situation. You just have to make sure that you never reach the point that the PRC starts an invasion. Do you see the problem from earlier? How the whole Iran War thing circles back to this? The best way to proactively protect Taiwan is by arming Taiwan now. The better prepared Taiwan is to defend itself, the less that a potential U.S. intervention factors into Beijing’s calculations. Make a successful landing impossible, and the rest of these concerns become irrelevant. Now, Taiwan is trying to do this, but both the effort and implementation have question marks.

8:50 The island has raised its inflation-adjusted defense spending about 50% over the last decade. It now spends 2.5% of GDP on defense, which is a very good number by the standards of the NATO Wales Pledge. But it is well under the 3.5% core spending threshold of the more recent Hague Pledge. And the security environment on the island looks less like Europe in 2014 and more like Europe in 2026—and perhaps substantially worse. Taiwan has plans to further increase its defense spending, but we will see where that goes. On the implementation side of things, the United States is causing hold ups. Through 2025, Taiwan committed between $20 and $22 billion dollars to U.S. arms purchases that remain

9:38 unfulfilled. An $11 billion commitment in December further added to the deficit. Many factors have contributed to the gap. The U.S. defense industrial base has been generally poor since the end Cold War ended, and it did not any get better under the George W. Bush years, when the United States focused on fighting insurgencies rather than building heavy metal. As if to underscore earlier supply chain concerns, the COVID pandemic tied up everything from chips produced in Taiwan meant for U.S. products to self-contained hang ups within the United States. This is when the backlog began to snowball, and it has not recovered since then. But the final nail in the coffin—well, previously, the final nail in the coffin—was the Ukraine War. Because this was not a hypothetical and Russia was actually invading a country,

10:26 the Biden Administration prioritized deliveries to Kyiv. That left Taiwan on the outside looking in. Actually, these shipments created the anxiety in the Pentagon that eventually led to the Trump Administration terminating direct aid to Ukraine. Problem solved, right? Ha, no, absolutely not. Now we have the Iran War. The United States will spend the next few years replenishing its own stockpiles. Taiwan will continue to receive some arms sales, but it will not be the full lot, and the backlog will likely grow. The island’s security is perhaps the most important priority inside of the Pentagon, but it is not the only priority. And any deliveries to Taiwan will pretty much only be useful for deterring the PRC. To maintain flexibility to cover other hotspots,

11:14 the United States will hold onto the lion’s shares of the stockpiles that it builds. That is the key U.S. vulnerability that the Iran War has exposed. It is not just that Washington has less metal to fight Beijing. It is that Taipei needs that metal delivered now. Any promises to rush deliveries after the fact are not inherently credible, because Taiwan might be a lost cause from the U.S. perspective by the time those deliveries can arrive. Never mind that actually making the deliveries in the middle of a war zone will be more difficult. Now that might have sounded like a grim assessment, so let me finish with a couple of hopeful points for U.S. partners in the region. One, in contrast to our earlier assumption, it is unlikely that the United States will be

11:59 caught completely by surprise if and when an invasion begins. The PRC will have to amass a large invasion force on the other side of the Strait, above and beyond what would be normal for a simple exercise. It is the same sort of tell-tale sign that Russia gave away on the eve of the Ukraine War, that time with troops lined up in Belarus among other places. But any response from the United States would be a literal rush job, and it would be hard to deter Beijing at this point. After all, the PRC knows that the United States could respond in that manner. If the PLA is already lining up at mainland ports, it is because the PRC’s war planners have calculated that the rush job the United States can offer will not be sufficient for the job. So this might keep the PRC from

12:48 starting the process in the first place, but I would get nervous if the process is underway. The second hopeful point is that there is another source of credibility that we have not yet discussed. Well before Taiwan began dabbling in semiconductors, the United States had a defense relationship with the island. Some of that was about taking a stand against communism, but it most certainly was not about democracy—Taiwan’s first free and fair presidential election was not until 1996. Rather, you might recall the following bit of military strategy. Taiwan is on what is called the “First Island Chain,” a bunch of territory that radiates out of mainland China. It is much, much easier for the United States to contain the PRC when the PRC holds none of those islands.

13:38 As soon as Taiwan falls, though, PLAN subs can disappear in the deeper waters of the Pacific. That is why I would not bet the house on the United States conceding Taiwan just because the fabs are all broken. If the United States cares about protecting the rest of the Pacific—and the world—then maintaining that defense perimeter is critical. One extra caveat here: the value of the First Island Chain is something that military planners understand. It is not something that the average American voter understands. That’s right. If you are viewing this video, you are better than average. Congratulations! Anyway, a central lesson coming out of the Iran War is that you need to educate and convince the American public of the strategic realities of a situation if you want them to support a

14:26 war effort. I do not think that trying to teach them on the fly is the right idea. This is something that needs to be repeated now and filter through the American public today if it is going to have the intended effect. So, what are our takeaway lines for today? The U.S. threat to intervene on behalf of Taiwan is only as good as the net benefit of doing so. A rapid destruction of Taiwan’s semiconductor manufacturing sector calls that into question. Solving that problem requires proactive investments in Taiwan’s defenses. However, the Iran War has called into question the U.S. ability to make those investments. Meanwhile, you can call in some questions over on my Geopolitics HelpLINE series, exclusively on Lines on Maps Extra. Or you just type in questions down below,

15:14 and the algorithm might push them to me. Who knows. And if you enjoyed today’s video, then please like, share, and subscribe, and I will see you next time. Take care.