House Speaker Kevin McCarthy, R-Calif., will host Taiwan President Tsai Ing-wen Wednesday for a historic, bipartisan meeting that underscores the importance of the U.S.-Taiwan partnership amid the threat posed by the People’s Republic of China.

McCarthy and bipartisan lawmakers will meet with Tsai at the Ronald Reagan Presidential Library in California. The Chinese government, which considers Taiwan to be a rogue province even though the communist mainland has never governed the island democracy of more than 23 million, has warned that it "firmly opposes" the meeting and said that the U.S. is "playing with fire" in allowing it to proceed.

The harsh rhetoric is a continuation of longstanding efforts by the Chinese Communist Party (CCP) to prevent other countries from taking actions it views as lending legitimacy to Taiwan’s government. 

When former Speaker Nancy Pelosi, D-Calif., visited Taiwan last summer — the first visit by such a high-ranking U.S. politician since Speaker Newt Gingrich, R-Ga., visited in 1997 — the CCP responded by holding large-scale, live-fire military drills in the areas around Taiwan in busy international sea lanes and aviation routes, causing traffic to be rerouted. 

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Given CCP officials' longstanding history of making statements reserving the right to "reunify" Taiwan with the communist mainland through the use of military force, the threat of a potential conflict over Taiwan’s continued autonomy will linger for the foreseeable future.

In recent decades, Taiwan has emerged as not only a vibrant democracy but one of the most dynamic economies in the world. It’s a world leader in the semiconductor industry, producing 92% of the world’s most advanced computer chips and between one-third to half of the less sophisticated chips that nonetheless play critical roles in manufacturing processes for cars, smartphones and PCs. 

Notably, the U.S. and Taiwan are negotiating a potential trade agreement that would deepen economic ties between the two nations, which has drawn the ire of China.

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Taiwan is separated from China by the Taiwan Strait, which is a vital sea lane for vessels traveling to and from ports in China, Taiwan, Japan and South Korea. The Wall Street Journal reported that half of the global fleet of container ships and 90% of the world’s largest ships by tonnage passed through the waterway in 2021. To the south lies the South China Sea, where trillions of dollars worth of commerce are moved each year.

A study by the Rhodium Group analyzed the potential economic impact of China imposing a naval blockade on Taiwan. The researchers wrote, "Unsurprisingly, we find that the scale of economic activity at risk of disruption from a conflict in the Taiwan Strait is immense: Well over 2 trillion dollars in a blockade scenario, even before factoring in international responses or second-order effects."

Rhodium’s analysis finding more than $2 trillion in economic impact from a Chinese blockade of Taiwan doesn’t factor in the potential escalation of a blockade into a kinetic military conflict. Under international law, a blockade is an act of war, so it carries a heightened risk of escalating if Taiwan, the U.S. or other countries move to break the blockade. Similarly, the PRC’s military modernization is aimed at gaining the potential to successfully invade Taiwan by 2027, which could prompt international intervention.

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While several countries near Taiwan have mutual defense treaties with the U.S. — most notably Japan, South Korea and the Philippines — the U.S. has neither a defense treaty nor formal diplomatic relations with Taiwan, although that wasn’t always the case.

In the years after the Chinese Civil War concluded in 1949 with the communists defeating the nationalists who fled the mainland for Taiwan, also known as the Republic of China (ROC), the U.S. entered into a mutual defense treaty with Taiwan that took effect in 1955 amid heightened tensions caused by the PRC seizing disputed islands claimed by Taiwan.

The mutual defense treaty remained in effect until the end of 1979, when the Carter administration granted formal recognition to the PRC and broke off formal diplomatic ties with Taiwan. The U.S. adopted a "one China" policy recognizing the PRC as the "sole legal government of China" and acknowledged, but didn’t endorse, the PRC’s view that Taiwan is part of China.

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As formal U.S. relations with Taiwan ended, Congress enacted the Taiwan Relations Act, which governs the unofficial relationship. It established a government-sponsored private nonprofit corporation known as the American Institute in Taiwan that handles many functions typically performed by embassies. 

Further, it stipulated the U.S. will provide defense articles to help Taiwan with its self-defense and that the president should inform Congress about threats to Taiwan’s security, economy and society along with the related danger posed to U.S. interests, which would prompt the president and Congress to take appropriate action.

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Although the Taiwan Relations Act doesn’t require the U.S. to defend Taiwan if it’s attacked, it states that it’s U.S. policy to maintain the capacity to defend Taiwan, creating "strategic ambiguity" about American responses to a PRC attack on Taiwan.