Whither the Coalition?

Key Insights

While Singapore, India, and Germany are examined individually in detail, common themes emerge from the comparative analysis across the three countries.

A sanctions coalition in defense of Taiwan is not guaranteed. Each of the countries studied has significant political, economic, or institutional constraints that may preclude them from joining a sanctions coalition to deter or respond to PRC actions that seek to unilaterally change the status quo on Taiwan.

U.S. leadership is essential—and currently in doubt. It would be exceedingly difficult for any of the countries studied to impose or otherwise support severe sanctions absent a strong U.S. leadership role, even in scenarios of overt military action by the PRC against Taiwan. This is both because they require the United States to lead by example and because sanctions without the economic heft of the United States, as the world’s largest economy, would be seen as futile.

In each of the three countries analyzed, stakeholders expressed deep doubts about the Trump administration’s commitment to Taiwan and skepticism about America’s ability to or interest in defending a rules-based international order. Each country has experienced a significant deterioration of its relationship with the United States since the start of the second Trump administration, stemming from tensions over U.S. trade actions and broader foreign policy disputes. The declining strength of traditional U.S. alliances and partnerships makes the viability of a U.S.-led sanctions coalition in defense of Taiwan substantially less likely.

Taiwan is not Ukraine . . . While Russia’s invasion of Ukraine sparked concerns about a similar conflict in Taiwan, there are stark and important differences between the two cases, including the contested nature of Taiwan’s international status, its island geography, and its central role in global supply chains.

. . . And the PRC is not Russia. Countries that were willing to sanction Russia, such as Singapore and Germany, may not be willing to sanction China, given a different set of strategic interests at play in a Taiwan contingency, the more central role that China plays in the global economy, and the PRC’s ability to retaliate in response to sanctions.

Triggers matter. Country views on a Taiwan scenario, including their political willingness to impose sanctions, are highly contingent upon how a crisis or conflict starts, with appetite for joining a sanctions coalition rapidly disappearing if Taiwan is perceived to be the instigator.

Timing matters. The idea of imposing preemptive sanctions on China as a deterrent measure is not well received in Singapore, India, or Germany. However, the United States has substantially more scope in the near term to explore cooperation on economic resilience with these countries, which in turn can support future sanctions campaigns by mitigating vulnerabilities to PRC economic pressure.

Alignment on sanctions may be secondary in certain cases. If the United States decides to engage militarily in a defense of Taiwan, it is likely to make many requests of its international partners, including military requests that may have more strategic value than alignment on sanctions.

Alignment on sanctions comes in many flavors. Imposing mirror sanctions on China is one way for the United States to pursue alignment with a sanctions coalition, but it is not the only way. Expectations for tight alignment—including the imposition of sanctions—with Germany, as a close security partner and large economy, would be high. In contrast, securing Singapore’s assistance in enforcing U.S. sanctions, even absent imposition of Singaporean sanctions, could be valuable given the country’s role as a trade and finance hub and would likely be a more politically viable request. India has limited means to pressure the PRC economically, given the structure of its trade ties, but could provide important diplomatic support in the Global South.

Private sector compliance may exceed home government actions. The United States retains significant leverage, through dollar-based sanctions and extraterritorial measures, to force broad private sector compliance with U.S. sanctions. Companies resident in foreign countries have a strong incentive to comply with U.S. sanctions, even if their home government has not imposed similar sanctions. However, private sector compliance will also be influenced by the U.S. enforcement posture, and aggressive enforcement is likely needed to ensure broad compliance among non-U.S. companies.

Recommendations

An effective approach to building a sanctions coalition must be grounded in a broader U.S. strategy for deterring and responding to significant escalation in PRC aggression that aims to alter the status quo on Taiwan. It must also facilitate alignment by calibrating U.S. requests based on each potential partner’s geopolitical, economic, and institutional capacities and constraints. The following are recommendations for U.S. policymakers with these goals in mind.

Pursue a steady, multifaceted approach to deterrence.

Neither the United States, nor any of the countries studied, wants conflict over Taiwan, and conflict should not be viewed as inevitable. Pursuing a robust deterrence strategy, including elements related to sanctions as well as other instruments of national power, should be a U.S. priority. This includes the following:

1. Maintain a dual-deterrence goal. Recognizing that international support is likely to be highly contingent upon how any potential conflict over Taiwan erupts, the United States should maintain a policy of deterring PRC aggression as well as Taiwanese moves toward independence that could provoke a PRC reaction.
2. Steady the U.S. ship. U.S. leadership is essential in any sanctions coalition in support of Taiwan. It is also in question in the wake of a highly disruptive trade and foreign policy under the second Trump administration. The United States must affirm its Taiwan policy with potential partners, such as the three countries studied, and commit to a strategy based on support for Taiwan and competition with the PRC. More broadly, even if this appears to be a long shot under the Trump administration, a renewed political commitment to traditional U.S. alliances and partnerships overall would have benefits for the ability of the United States to generate support for a sanctions coalition in support of Taiwan specifically.
3. Expedite efforts to build deterrence through resiliency. Economic pressure becomes more viable the more resilient that the U.S. and partner economies are to PRC retaliation and the potential economic shocks of conflict over Taiwan. Bolstering resiliency can support deterrence by enabling a broader set of sanctions options, facilitating clearer signaling about the ability of the United States and partners to impose economic costs on the PRC, and building capacity to withstand PRC retaliation.

Develop a well-calibrated approach to building a sanctions coalition.

Different partners bring different capabilities and constraints to any potential sanctions coalition in support of Taiwan. A well-calibrated approach to building a sanctions coalition would include the following:

1. Pursue tight alignment with close partners. The United States should clarify with close partners, such as Germany, that it expects alignment on sanctions in the event of a Taiwan contingency. To facilitate alignment, it should intensify strategic planning and intelligence sharing to game out potential sanctions options and necessary resiliency preparations.
2. Facilitate looser alignment with other partners. Recognizing that neither Singapore nor India are likely to mirror U.S. sanctions, the United States should develop other means to engage them in an economic pressure campaign, such as cooperation on promoting compliance with U.S. sanctions or providing diplomatic support.
3. Make an interests-based argument for the defense of Taiwan. Taiwan’s contested status, along with the disruption of current U.S. foreign policy, make appeals to an international rules-based order more difficult. The United States may have more success in rallying support for an economic pressure campaign by appealing directly to the specific economic and strategic interests of each potential partner that would be implicated in a Taiwan crisis.
4. Use U.S.-vs.-China framing selectively. Forcing Singapore or similarly situated partners to view a Taiwan contingency through the lens of U.S.-PRC competition is likely to be counterproductive, while also undermining more direct arguments about the strategic value of supporting Taiwan. In other cases, such as with close security partners like Germany, a competitive framing may be useful if the United States makes clear that support for Taiwan is a priority within the alliance.

Introduction

Sanctions are most effective when implemented with partners, and this would be doubly true for strong sanctions on China should the People’s Republic of China (PRC) act to unilaterally change the status quo on Taiwan. Yet the ability of the United States to build a broad-based sanctions coalition in support of Taiwan is fundamentally uncertain. The scale and depth of China’s international economic ties would complicate efforts, as costs imposed on China may rebound to damage the sanctioning countries, either through spillover effects or stiff PRC retaliation. Taiwan’s contested status would create diplomatic and political obstacles to rallying support. Overcoming these challenges would require a clear vision and strategy from the United States, as the only country with the military and economic power to defend Taiwan, as well as steady U.S. leadership to build broader support for Taiwan.

Even with such leadership, though, who would join a sanctions coalition? One might expect treaty allies in the Indo-Pacific region, such as Australia and Japan, to do so, alongside NATO allies. But the potential for massive economic fallout could give even close U.S. partners pause. Countries further outside the U.S. alliance structure would likely have even stronger disincentives to participate in a sanctions coalition, given a different perception of their security interests and a more skeptical view of the utility of sanctions.

Building a sanctions coalition in support of Taiwan would be difficult under the best of circumstances. The unavoidable fact is that the Trump administration’s approach to U.S. alliances and partnerships has eroded the trust and goodwill that would have made such an endeavor more feasible. Punishing and unpredictable tariffs, launching a war of choice in Iran nearly alone, and threats to the sovereignty of U.S. allies have, among other issues, significantly degraded the strength of the U.S. alliance system and the credibility of America as the guarantor of international peace and security. A weaker foundation of alliances will make creating a coalition in support of Taiwan that much more difficult.

Under these challenging conditions, the goal of this paper is to shed light on how various types of countries may respond to a Taiwan contingency, with a focus on whether they would join a U.S.-led sanctions coalition in support of Taiwan. Three countries (Singapore, India, and Germany) were chosen as case studies to illuminate different combinations of the geopolitical, economic, and institutional incentives that would drive national policymaking in response to a Taiwan contingency. The analysis accounts for the role that each country’s relationship with the United States, and specifically the Trump administration, may play but also assesses each’s independent interests in the status of Taiwan. None of these three countries would be easily persuadable, but the support of each could be valuable in their own way.

Singapore is the classic example of a hedging country. With its high dependence on global trade and a foreign policy founded on balancing the relative regional power of the United States and the PRC, Singapore’s primary objective for any sanctions coalition would be to stay out of it. At the same time, its role as a global financial and trade hub makes its cooperation essential for sanctions to bite.

India has a more natural animosity toward the PRC, in no small part due to continuous clashes over territorial disputes along their shared border. India’s economic relationship with China is lopsided, and India’s heavy reliance on Chinese imports means that it lacks economic ties that could be effectively weaponized as part of a sanctions campaign. The country can, however, play an important role in longer-term efforts to pursue a deterrence through resiliency strategy by serving as an alternate manufacturing location for firms derisking from China. Its leadership role within the Global South could also be an important diplomatic asset.

Germany has strong economic and security ties with the United States, along with a commitment to a rules-based international order. The deep dependence of its export-led economy on China, however, creates strong resistance to any sanctions action that could rebound negatively on Germany. Germany, along with Europe more broadly, has serious capacity issues, as its political attention is consumed by deterring the existential Russian threat to European security and managing the declining alliance with the United States. Competition with the PRC often seems a more distant or abstract problem in comparison.

Each of these countries would bring geopolitical, economic, and institutional capacities and constraints to the question of a possible sanctions coalition in support of Taiwan. To delve further into these capacities and constraints, the research team conducted interviews with Singaporean, Indian, and German (as well as European) stakeholders; conducted research trips to Singapore, Berlin, and Brussels; convened roundtable discussions in Washington, D.C., and with stakeholders in New Delhi; and conducted desk research.

An important part of the research effort was to analyze how different scenarios would impact each country’s calculus. The research team posited three types of potential crisis scenarios that could arise in the Taiwan Strait:

• Intensification of gray-zone activities against Taiwan: The PRC decides to significantly intensify its existing gray-zone activities against Taiwan. This could include, for example, a massive ramp-up in military drills around Taiwan with a focus on invasion simulations, intensified cyber actions, or more widespread economic coercion.¹ Though similar in nature to existing gray-zone activities, the scale intensifies to such an extent that the United States may be compelled to respond. However, negative impacts of the gray-zone activities are limited to Taiwan, and costs are not felt by international actors.
• Short-duration conflict: The PRC engages in an active military operation against Taiwan with actions that are designed to be decisive and fast, while also allowing for escalation if necessary. This could include, for example, measures such as a rapid, high-intensity barrage of air and missile attacks against key targets in Taiwan, seizure of an outer Taiwanese island in the Kinmen or Matsu archipelago, or short-duration embargo of goods going in and out of Taiwan. The conflict is temporary but is an undeniable change to the status quo, and it imposes some short-term costs on international actors, while sharpening concerns about further PRC aggression.
• Long-duration conflict: The PRC attempts a full-scale invasion of Taiwan. The conflict draws the United States and its allies into a prolonged conflict that lasts multiple months, devastating the island of Taiwan. There is loss of life and destruction of military assets for the United States and allies.

These scenarios are deliberately sketched in broad terms. Recognizing the almost infinite number of variables in any real-world scenario, the scenario-based discussions were used primarily as prompts to test the boundaries of when the three case-study countries would or would not be motivated to participate in a sanctions coalition. The scenarios should also be read as hypothetical, not predictive, as conflict over Taiwan is not inevitable. The phrase “a Taiwan contingency” is used in this report to refer to this range of potential scenarios.

The idea of a sanctions coalition assumes that the United States will play a leading role in the defense of Taiwan, including in developing an economic pressure strategy. The United States has strong interests in preventing unilateral changes to the status quo on Taiwan, and indeed it is stated U.S. policy to do so. The economic costs of a conflict over Taiwan could be staggering, with one estimate noting that a conflict could shave 10 percent off global GDP.² PRC control over Taiwan could involve key assets, including Taiwan’s essential chip-making capabilities. It could also enable further projection of the PRC’s military power throughout the Indo-Pacific region and a corresponding diminution of U.S. influence and maneuverability. Taiwan’s flourishing democracy is also an important factor. These interests may lead the United States to mount a defense of Taiwan if needed, and the United States is the only country that has the economic heft and financial weapons to enact a comprehensive economic pressure campaign to deter or respond to PRC aggression that forcefully changes the status quo.

It is important to note, however, that the United States has historically not used sanctions to react to PRC aggression toward Taiwan in a directly responsive, tit-for-tat manner. It has also never faced sanctions decisions that could have such profound impact on the U.S. and global economies. This creates a significant level of uncertainty over U.S. intentions and willingness to impose sanctions in any real-world scenario, regardless of severity. The Trump administration’s shifting policy on the PRC introduces further uncertainty about a U.S. response. Nevertheless, this report explicitly assumes that the United States would impose sanctions in response to PRC aggression and that sanctions could reach high escalation levels, including severe actions such as sanctions on major Chinese banks, particularly in a long-duration conflict in which the United States and the PRC are directly engaged militarily.

This report is intended to contribute to ongoing policy debates on the role that economic measures can play in a broader strategy to deter or respond to PRC aggression toward Taiwan. It is complementary to published work from the Atlantic Council, the Rhodium Group, and the RAND Corporation, who conducted similar country case-study work on potential sanctions coalitions. The Atlantic Council and Rhodium focused on the G20, and RAND examined Japan, Australia, and the United Kingdom (UK).³ Read together, this coordinated body of work provides a breadth and depth of analysis about the contours and viability of any sanctions coalition in support of Taiwan. Forthcoming work from the Center for a New American Security (CNAS) on the history and potential utility of U.S. and allied sanctions to respond to PRC gray-zone activities against Taiwan will further expand this literature. All of this work should be read with the understanding that sanctions alone cannot be expected to deter the PRC or compel a halt to aggression once launched and that their effective use can only come as part of a broader deterrence effort that includes substantial military, cyber, and diplomatic components. Nonetheless, given the likelihood that sanctions would be part of the equation, it is worth considering how to maximize their utility.

This report also builds on prior CNAS work, specifically No Winners in This Game: Assessing the U.S. Playbook for Sanctioning China, which provided a comprehensive assessment of the relative leverage that the United States and the PRC have in the economic domain.⁴ Key findings from No Winners are relevant to this report, including that the inability to build a clear consensus on an intent to impose coordinated sanctions well in advance of a conflict can seriously erode the deterrent effect of sanctions. It is in the spirit of encouraging analysis, coordination, and strategic planning for a sanctions campaign that this report is offered.

The first section of the report highlights common themes that emerged from the case-study analysis. The second section dives deeper into the geopolitical, economic, and institutional capacities and constraints that face Singapore, India, and Germany. It also explores how the United States could craft an effective partnership with each country, taking into account these capacities and constraints. Finally, the report concludes with recommendations related to building a future sanctions coalition for U.S. policymakers as they consider broader efforts to deter PRC aggression against Taiwan.