My recent trip to Taiwan, where I presented President Lai Ching-te with the 2025 “Index of Economic Freedom,” highlighted the many changes I’ve witnessed over the course of dozens of visits since 1971. Despite constant threats from mainland China, what it’s managed to achieve is truly remarkable.

Walking the streets of Taipei, Taiwan’s capital city, today, you’d never know this island nation was under martial law as recently as 1987 or that it held its first direct presidential election in 1996. Its transition from economic dud to economic dynamo has aptly been dubbed the “Taiwan Miracle.”

Consider the numbers. Of 184 countries graded in the 2025 Index of Economic Freedom, Taiwan finished at number four—trailing only its neighbors Singapore, Switzerland, and Ireland.

On measure after measure, Taiwan scores well above the global average. Property rights are secure, government spending is low, fiscal health is strong, and trade freedom is robust.

Taiwan has built prosperity on a solid foundation: Thousands of small and medium-sized businesses. These enterprises, sometimes called “an army of ants,” have adapted to the nation’s changing circumstances and adjusted to fluctuations in international markets.

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The strength of this “army” lies with Taiwan’s people. Well-educated, industrious and entrepreneurial, they’ve proven that individual initiative coupled with economic freedom brings prosperity, even to an island that’s diplomatically isolated.

Just as competition strengthened Taiwan’s economy, it has strengthened its political institutions, even in the face of frequent intimidation from Beijing. Its long-standing ties with the U.S.—which helped contain the spread of Communism—have been a crucial element in its success.

Take the semiconductor industry, which is key to Taiwan’s economy. As China expert Michael Cunningham recently noted, China desperately wants to overtake the U.S. as the global leader of the semiconductor industry. But it trails the U.S. by a huge margin, thanks to America’s winning formula with Taiwan.

In essence, the United States can pour huge amounts of money into researching and developing the world’s fastest, highest-performing semiconductor chips because we rely on Taiwan to build so many of them. Although domestic production in Arizona and Texas is growing, Taiwan builds almost half of all U.S. chips.

It’s a true win-win. By having each nation specialize in what it does best, we ensure the availability of high-quality, low-cost chips. We also keep America well ahead of China in chip technology.

This makes Beijing’s talk of imminent “reunification”—sometimes described as “peaceful,” sometimes not—all the more alarming. It’s vital that we continue to stand by such a staunch ally.

America’s commitment is reflected in the Taiwan Relations Act. Signed into law 46 years ago, the spirit and intent of the TRA—to deter aggression from Beijing, promote economic freedom, and protect human rights on Taiwan—are as robust today as they were in 1979.

Under the TRA, the United States must assist the island with its defense. Of course, we also must work with China, which has many missiles pointing at Taiwan. This situation makes managing cross-strait relations tricky, but we must remain resolute and honor our promise to Taiwan.

This entails providing military aid, of course, such as the $2 billion arms sale package Congress approved a few months ago. But it also means providing economic help like the U.S.-Taiwan Expedited Double-Tax Relief Act, a bilateral tax treaty that the U.S. House of Representatives passed in January.

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The U.S. has such treaties with 60 other nations, including China. They’re designed to mitigate the effect of “double taxation,” in which U.S.-based citizens who own businesses in another country must pay taxes in both countries. This new treaty with Taiwan will help spur greater investment from Taiwan in the U.S., which will strengthen our ties and add more jobs for Americans.

But Taiwan must also step up its own defense. It should emulate what Ukraine did before Russia invaded in 2022 and arm its people. Thousands of Ukrainian civilians learned how to handle firearms before the invasion, creating a home guard akin to the U.S. colonists who managed to wrest their liberty from Britain, then the world’s strongest military.

Ukraine’s home guard forestalled a quick victory by Russia. A Taiwanese home guard can be as effective. Beijing can’t afford a protracted fight to “reunify” with Taiwan. A Chinese takeover must be fast. A Taiwanese home guard would make this impossible, so we should encourage Taipei to create one—now.

This isn’t just about Taiwan’s defense. It’s about our nation’s credibility as a security partner. It’s about the maintenance of peace and security in the vital Asia-Pacific region.

The decisions that we make, and that we encourage our Taiwanese partner to make, will help determine whether Taiwan retains its hard-won freedoms—and continues its mutually beneficial partnership with the U.S.