December 12, 2025, WASHINGTON, D.C. - Senators Dave McCormick (R-PA) and Jeanne Shaheen (D-NH) today introduced the Fortifying United States Markets Against PRC Military Escalation Act of 2025, which would establish an Advisory Committee at the Financial Stability Oversight Council (FSOC) to analyze, study, and report on the market implications and vulnerabilities related to hostilities by the People's Republic of China (PRC) toward Taiwan.

"Taiwan is an essential trading partner of the United States and a key exporter of advanced technology that are critical to global supply chains,"Senator McCormick said. "This is an economic partnership that is of tremendous benefit to the U.S., but also carries economic vulnerabilities in the event of a conflict in the South China Sea. This legislation would ensure that we are prepared for this scenario."

"Taiwan is a major economic partner for America and faces a significant threat of military action by the People's Republic of China," said Senator Shaheen, Ranking Member of the Senate Foreign Relations Committee. "Last year, Bloomberg estimated a war over Taiwan could cost the global economy $10 trillion. This bill would give American policy makers better insight into the impacts to the U.S. economy of PRC aggression against Taiwan, as well as how we can best prepare for any potential escalation."

The economic interconnection between the United States, the People's Republic of China, and Taiwan creates significant vulnerabilities for U.S. markets in the event of military escalation in the Western Pacific. Goods and services trade between the United States and China totaled approximately $660 billion in 2024, while U.S.-Taiwan trade reached $186 billion. There is no doubt that abrupt fractures in trade would require immediate and decisive action.

Recent geopolitical events have demonstrated the immediate economic impact of an armed conflict. In addition to the extensive human suffering caused by the Russian invasion of Ukraine in 2022, commodities prices underwent significant volatility and global markets faced widespread disruption. This turbulence has intensified the need to examine more closely the economic consequences of a conflict.

While the Russian economy is approximately the 10th largest in the world, China has a GDP of more than seven times that of Russia. The ripple effect of military hostilities toward Taiwan would have devastating human and economic costs. Closure of shipping lanes would have an immediate impact on supply chains for automobiles, electronics, and critical technology. The banking system would undergo stress, and small businesses across the country would face aftermaths. The potential international trade and global market fractures require thoughtful planning and coordination among policymakers, government agencies, and market participants to ensure the United States is prepared.

The Advisory Committee would open lines of communication between policy makers, government agencies, and capital markets constituents to prepare for a potential response, and to mitigate economic strain and market volatility related to any such escalation by the People's Republic of China toward Taiwan.

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