The 100-Mile Bottleneck: How One Strait Controls the World Economy

The Taiwan Strait is approximately 100 miles wide at its narrowest point. Through this corridor passes an estimated $5.3 trillion in annual trade — roughly 50% of global container shipping and a substantial share of the world's energy shipments. No other maritime chokepoint carries a comparable volume of goods.

In March 2021, the container ship Ever Given ran aground in the Suez Canal, blocking traffic for six days. The disruption cost an estimated $9.6 billion per day in trade delays. Global supply chains took months to recover. That was six days in a canal that carries approximately 12% of global trade.

The Taiwan Strait carries four times that volume. And a conflict-driven disruption would not last six days.

What Transits the Strait

The sheer diversity of goods transiting the Taiwan Strait is what makes it irreplaceable. Based on Lloyd's List Intelligence data, MarineTraffic AIS data, and UNCTAD shipping statistics:

• Container shipping: Approximately 5,400 container ships transit the strait annually — connecting manufacturing hubs in China, Japan, South Korea, and Southeast Asia with consumers worldwide.
• Energy: Roughly 25% of global LNG trade passes through or near the strait. Japan, South Korea, and Taiwan import virtually all their natural gas by sea. Australia's LNG exports to Northeast Asia transit these waters.
• Raw materials: Iron ore from Australia and Brazil destined for Chinese, Japanese, and Korean steel mills. Grain shipments from the Americas to Asia.
• Semiconductors: Taiwan alone exports approximately $180 billion in semiconductors annually. These chips ship primarily by air, but the disruption of Taiwan's ports and airports would halt production regardless.

The strait is not merely a shipping lane — it is the central artery of the global manufacturing supply chain. Every product that contains components from East Asian manufacturing depends, directly or indirectly, on the free passage through these waters.

The Suez Comparison — And Why It Understates the Risk

The Ever Given incident provides a useful baseline, but understates a Taiwan Strait disruption by at least an order of magnitude. Consider the key differences:

• Duration: The Suez blockage lasted 6 days. A conflict-related closure of the Taiwan Strait would last weeks, months, or longer. Even after a conflict ends, sea mines, unexploded ordnance, and insurance risk could keep the strait functionally closed for an extended period.
• Alternatives: Ships blocked by the Suez could reroute around the Cape of Good Hope — adding time and cost, but preserving the route. There is no equivalent alternative for the Taiwan Strait. Routing around it would add approximately 1,000–2,000 nautical miles depending on origin and destination, but more critically, the routes themselves pass through contested waters.
• Scale: The Suez handles roughly 12% of global trade. The Taiwan Strait handles roughly 50% of container traffic. The magnitude of disruption is not proportional — it is exponential, because supply chain failures cascade.
• Insurance: During the Suez blockage, ships were merely delayed. In a conflict scenario, insurers would classify the entire region as a war risk zone. Lloyd's of London precedent (from the 2019 Gulf of Oman attacks) shows that war-risk insurance premiums can increase 100-fold overnight — effectively pricing most commercial shipping out of the area.

Cascading Failures: Sector by Sector

Energy

Japan imports 97% of its oil and 98% of its natural gas. South Korea imports 92% and 99% respectively. Taiwan imports 98% of its energy. All three nations receive the majority of these imports via sea routes passing through or near the Taiwan Strait.

Japan maintains a strategic petroleum reserve of approximately 175 days. South Korea maintains approximately 95 days. Taiwan maintains approximately 90 days for oil and significantly less for natural gas (LNG storage is inherently short-term due to boil-off).

Within 60–90 days of a disruption, Northeast Asian energy markets would face crisis-level shortages. Electricity rationing in Japan and South Korea — the world's third and tenth largest economies — would cascade into manufacturing output, affecting global supply chains for automobiles, electronics, chemicals, and steel.

Semiconductors

Even without direct damage to fabs, a conflict in the Taiwan Strait would halt semiconductor exports from Taiwan. TSMC's operations require continuous inputs — ultra-pure chemicals, specialized gases, photomask supplies — many of which are imported by sea.

The 2021 chip shortage, caused by relatively minor supply-demand imbalances and a few factory incidents, cost the global auto industry alone an estimated $210 billion and reduced production by 7.7 million vehicles. Consumer electronics lead times extended to 6–12 months.

A complete halt of Taiwanese semiconductor production would be qualitatively different. TSMC produces over 90% of the world's most advanced chips (sub-7nm). There is no alternative source. Intel, Samsung, and other fabs produce advanced chips, but at a fraction of TSMC's volume and with 2–3 year lead times for capacity expansion.

Bloomberg Economics estimates the semiconductor component alone would cost the global economy $1.6 trillion in the first year.

Food

Asia-Pacific food supply chains depend on maritime shipping routes that transit through or near the Taiwan Strait. China is the world's largest importer of soybeans (approximately 100 million tons annually, primarily from Brazil and the United States), most of which arrive at ports in eastern China via these sea lanes.

Disruption would trigger price spikes in global grain markets. The UN Food and Agriculture Organization's food price index — which surged 30% following Russia's invasion of Ukraine due to Black Sea shipping disruptions — would face a proportionally larger shock.

Countries in Africa and the Middle East, which spend the highest percentage of household income on food, would be disproportionately affected. The 2022 food price spike contributed to political instability in Sri Lanka, Pakistan, and several African nations. A Taiwan Strait disruption would be significantly larger in scale.

Manufacturing

Modern manufacturing operates on just-in-time supply chains with minimal inventory buffers. The average manufacturer holds approximately 30 days of component inventory. Many hold less.

A Taiwan Strait disruption would simultaneously affect:

• Semiconductor supply (from Taiwan)
• Component supply from Chinese, Japanese, and Korean factories
• Raw material shipments to those factories
• Finished goods exports from the entire region

Within 30–60 days, factory shutdowns would begin cascading across Europe, North America, and the rest of Asia. The automotive, electronics, aerospace, medical device, and defense industries would be affected simultaneously.

No Country Can Insulate Itself

The interconnected nature of modern supply chains means that no nation — regardless of geographic distance from the Taiwan Strait — can fully insulate itself from disruption.

Europe: The EU imports approximately €200 billion in goods from Taiwan, China, Japan, and South Korea annually via routes transiting the strait. European manufacturers depend on Asian-sourced semiconductors, displays, batteries, and electronic components. Germany's automotive sector alone would face production halts within weeks.

Americas: The United States sources approximately 92% of its advanced semiconductor supply from Asian fabs (primarily TSMC). Latin American economies dependent on commodity exports to China would see demand collapse.

Africa: The continent imports approximately 16% of its food and a majority of manufactured goods from Asia. Price increases in both categories would compound existing food security and development challenges.

Middle East: Gulf states export approximately 35% of their oil and LNG to Northeast Asian markets. Disruption of those exports would affect fiscal revenues and regional economic stability.

The Bloomberg Assessment

In 2024, Bloomberg Economics published the most comprehensive economic modeling of a Taiwan Strait conflict to date. Their headline finding: a conflict would cost the global economy approximately $10 trillion — roughly 10% of global GDP.

For scale:

• The 2008 financial crisis reduced global GDP by approximately 2%
• The COVID-19 pandemic reduced global GDP by approximately 3.1% in 2020
• A Taiwan Strait conflict would be approximately 3–5 times larger than either

These estimates do not include the costs of post-conflict reconstruction, long-term supply chain restructuring, or the geopolitical consequences of the conflict's outcome. They measure only the direct economic disruption.

A Global Public Good

In economics, a "public good" is something that benefits everyone and that no one can be excluded from enjoying. Clean air is a public good. National defense is a public good. And increasingly, economists and strategists argue that free navigation through critical maritime chokepoints is a global public good — one that the international community has an interest in maintaining.

The data does not prescribe policy. It describes a reality: the global economy passes through a 100-mile corridor, and the security of that corridor is not a regional issue. It is a global one.

Further Reading

• What Happens to the World If TSMC Stops? A Global Impact Analysis
• Why Taiwan Matters to the Entire World — Not Just Asia
• What History Tells Us About Abandoning Strategic Allies