Hormuz chaos sparks warning: China could strangle Taiwan without firing a shot

China may not need to launch a military invasion of Taiwan to trigger a global economic crisis, according to a new analysis that draws lessons from recent disruptions in the Strait of Hormuz.

As Iran showed earlier in 2026, even limited interference with a key shipping choke point can rattle global markets: spiking prices, disrupting supply chains and shaking investor confidence. 

Analysts warn Beijing could apply a similar strategy to Taiwan, the world’s most critical hub for advanced semiconductors.

If China moved to choke off Taiwan tomorrow, "Americans with 401(k)s would feel it right away," Stanford Hoover Institution fellow Eyck Freymann told Fox News Digital. 

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A disruption to Taiwan’s semiconductor supply could trigger a sharp sell-off in global markets, hitting major U.S. technology stocks that make up a significant share of retirement portfolios.

While much of Washington’s focus has long centered on deterring a Chinese invasion of Taiwan, Freymann argues the greater risk may be a more ambiguous strategy — using economic pressure, military signaling and market panic to isolate the island without triggering a full-scale war.

He expands on that argument in his new book, "Defending Taiwan: A Strategy to Prevent War with China," published Tuesday, warning Beijing could "squeeze, isolate, and coerce Taiwan into submission without firing a shot."

China significantly has increased military activity around Taiwan in recent years, conducting large-scale exercises that simulate encirclement and blockade scenarios. Analysts say those drills reflect a growing emphasis on options short of invasion.

That analysis comes as a new Annual Threat Assessment released by the Office of the Director of National Intelligence found that Chinese leaders "do not currently plan to execute an invasion of Taiwan" and "do not have a fixed timeline for achieving unification."

The finding has fueled debate in Washington over whether the United States is too focused on deterring a traditional amphibious assault while overlooking more gradual forms of coercion.

Chinese military doctrine has long included what it calls a "joint blockade campaign," and analysts note Beijing has increasingly signaled its ability to isolate Taiwan through a combination of naval, air and coast guard operations.

China has significantly increased military activity around Taiwan in recent years, conducting large-scale exercises that simulate encirclement and blockade scenarios. Analysts say those drills reflect a growing emphasis on options short of invasion.

Analysts at the Institute for the Study of War and the American Enterprise Institute have similarly warned that China is actively rehearsing elements of a blockade, with recent exercises simulating efforts to cut off Taiwan’s major ports and restrict access to energy and trade routes.

Freymann said the intelligence assessment aligns with his view that Beijing’s preferred strategy may fall short of outright war.

"China’s Plan A is to take Taiwan without a fight," he said.

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Analysts say China would not necessarily need to impose a full blockade. Instead, Beijing could rely on military drills, maritime inspections and restricted zones to raise the risk of operating in the Taiwan Strait. 

That uncertainty alone could be enough to drive insurers and shipping companies out of the region, effectively cutting off Taiwan’s trade. With roughly half of the world’s container ships passing through the strait, even limited disruption could ripple across global supply chains.

A recent Center for Strategic and International Studies report, based on 26 war game simulations, examined scenarios in which Chinese forces board and interdict commercial ships bound for Taiwan, triggering widespread disruption to global trade and raising the risk of escalation.

The same analysis found that while China could inflict serious economic harm, a blockade would not be a low-risk option and could quickly spiral into a broader military conflict involving the United States and its allies.

Iran’s actions in the Strait of Hormuz temporarily disrupted roughly 20% of global oil supply, triggering immediate volatility in energy and financial markets. A similar disruption in Taiwan, he argued, would have even broader consequences.

Taiwan produces roughly 90% of the world’s most advanced semiconductors, including the cutting-edge chips that power artificial intelligence systems, consumer electronics and U.S. military technology.

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The stakes extend far beyond Taiwan itself. 

A disruption in semiconductor supply could ripple across the global economy, affecting everything from artificial intelligence development and U.S. defense systems to consumer electronics and automotive manufacturing. Analysts warn that even a temporary shutdown of Taiwan’s chip industry could trigger widespread economic disruption, given the lack of viable alternatives at the most advanced level.

That concentration has long been referred to as Taiwan’s "silicon shield," the idea that the island’s central role in the global economy helps deter conflict by raising the stakes for any disruption.

But that same dominance also creates a vulnerability. Unlike oil, there is no strategic reserve to offset a sudden semiconductor supply shock.

"If you take away the United States’ access to advanced compute, there goes the whole AI trade," Freymann said. "It risks the possibility of a Lehman Brothers-style cascading event."

Such a shock could ripple through financial markets, hit major U.S. technology companies and push the global economy toward recession, he said.

Freymann also warned that China may not even need to impose a full blockade to achieve its goals, instead relying on incremental "gray zone" tactics already in use.

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"The danger is that they’re already doing it," he said.

Those tactics could include harassment of commercial shipping and air traffic, regulatory pressure on companies operating in the region, and other measures designed to increase risk without triggering a direct military response. Over time, he argued, such pressure could force private companies, particularly insurers, shipping firms and airlines, to scale back operations around Taiwan.

That dynamic could allow Beijing to effectively isolate the island without firing a shot, as market actors move to avoid risk.

Still, analysts caution that the Taiwan Strait presents a more complex and heavily militarized environment than the Strait of Hormuz, where U.S. naval operations and regional dynamics differ significantly.

Taiwan is also taking the threat seriously. 

Officials have begun planning exercises aimed at maintaining access to critical supplies, including energy, in the event of a blockade scenario, underscoring growing concern that such a disruption is plausible.

Freymann said the United States must adapt its strategy to account for these risks, warning that traditional military deterrence alone may not be sufficient as tensions with China continue to play out at the highest levels of diplomacy.

The issue is expected to loom over a high-stakes meeting between President Donald Trump and Chinese President Xi Jinping  scheduled for May in Beijing, where Taiwan, trade tensions and U.S. arms sales to the island are likely to be key points of discussion.

At the same time, he cautioned that any shift in strategy must be paired with a steady diplomatic posture to avoid signaling weakness or escalation.

Freymann urged U.S. leaders to maintain a consistent and measured approach, warning that even subtle shifts in language or policy could be interpreted as weakness. 

"We have a long-standing one-China policy. It shows that we are resolved if our principal position is tested, but that we’re also restrained," he said.

"We want China and Taiwan to resolve their disputes through negotiation without force or coercion."

The Chinese embassy and Taiwan foreign ministry could not immediately be reached for comment.