Chairman Blaine Luetkemeyer (R-Mo) said a Chinese invasion of Taiwan would result in the U.S. having to "enact massive financial sanctions and major trade restrictions" which could have severe implications for the United States economy and stock market.
"Most Americans would be shocked at how quickly the fallout from a Chinese invasion of an island more than 7,000 miles away would hurt America’s main streets. The U.S. would immediately enact massive financial sanctions and major trade restrictions on China. China would do the same to us. Military actions would follow. The two largest economies in the world who are also each other's largest trading partners would, for all intents and purposes, be at war," said Blaine Luetkemeyer (R-Mo), Congressman.
This fall in stock prices would be attributed to the uncertainty investors might face regarding the United States' response. Such uncertainty could prompt both retail and institutional investors to liquidate their equity positions to mitigate potential risk in a volatile market. An invasion of Taiwan could also lead to a 10% reduction in global GDP and cost over $10 trillion to finance. According to Bloomberg, this decrease in GDP would be twice as large as the impact COVID-19 had on the global economy.
In an effort to reassure institutional investors, Luetkemeyer has introduced a new bill designed to study the market implications of such an attack. The Fortifying U.S. Markets from Chinese Military Aggression Act proposes creating a committee of 12 members tasked with analyzing and studying vulnerabilities that may arise in the event of a conflict. This committee aims to mitigate risks posed by the Chinese Communist Party (CCP) on U.S. financial institutions and the economy.
Luetkemeyer introduced this bill alongside Congressman Ritchie Torres, who stressed the urgency for the United States to be fully prepared for a potential Taiwan invasion. Torres stated, "It is imperative for the U.S. government to be prepared for any and all global emergencies. We must find and maintain a fair and equal strategic competition with the CCP." He continued, "However, their actions towards Taiwan are threatening peace and stability in the Taiwan Strait. If the CCP takes drastic action by advancing on Taiwan, we must proactively prepare our national economy."
