WASHINGTON, D.C. — A bipartisan pair of U.S. senators this week introduced legislation aimed at preparing American financial markets for the economic shockwaves that could follow a military escalation by China toward Taiwan, a scenario lawmakers warn could rattle global supply chains and destabilize the U.S. economy.
Sen. Dave McCormick, a Pennsylvania Republican, and Sen. Jeanne Shaheen, a New Hampshire Democrat and the ranking member of the Senate Foreign Relations Committee, unveiled the Fortifying United States Markets Against PRC Military Escalation Act of 2025. The proposal would create an advisory committee within the Financial Stability Oversight Council to examine how a conflict involving Taiwan could affect U.S. markets and financial stability.
McCormick said Taiwan’s role in global trade makes preparation essential. Taiwan is a major exporter of advanced technologies critical to worldwide supply chains, he said, and any disruption could expose serious vulnerabilities for American businesses and consumers. The legislation, he added, is designed to ensure policymakers are better prepared for a high-impact geopolitical crisis in the Western Pacific.
Shaheen pointed to the enormous potential cost of such a conflict, citing estimates that a war over Taiwan could inflict trillions of dollars in damage to the global economy. She said the bill would give U.S. leaders clearer insight into how aggression by the People’s Republic of China could reverberate through American markets and what steps could help blunt the fallout.
The stakes are high. Trade between the United States and China totaled about $660 billion in 2024, while U.S.–Taiwan trade reached $186 billion. Analysts and lawmakers warn that a sudden rupture in those relationships could force rapid, far-reaching responses from financial regulators and economic policymakers.
Recent history offers a cautionary example. Russia’s 2022 invasion of Ukraine triggered volatility across commodities markets and disrupted global trade, effects that rippled well beyond Eastern Europe. Lawmakers note that China’s economy is far larger than Russia’s, raising concerns that a conflict over Taiwan could produce far more severe economic consequences, including shipping lane closures, stress on the banking system, and shortages affecting industries from automobiles to electronics.
Under the proposed legislation, the new advisory committee would bring together policymakers, government agencies, and market participants to assess risks and improve coordination ahead of any potential crisis involving Taiwan.
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