Taiwan is raising defense spending to a record level — good news for U.S. defense contractors and for Taipei's deterrence push, but it lands in the middle of Trump's dealmaking with Beijing.

• Taiwan's cabinet approved a defense budget above NT$1 trillion for the first time, close to 4% of the economy.
• The message to Washington: Taiwan is paying for its own defense and is ready to buy more American weapons.
• The message to Beijing: Taipei wants to make any invasion expensive enough to not be worth trying.
• The catch is that Washington has to approve the sales, and Trump has sat on $14 billion worth while calling arms deals a bargaining chip with China.
• Taiwan's opposition-controlled legislature has repeatedly cut and delayed President Lai Ching-te's defense requests, and has to approve this one too.

Outlook: With Xi Jinping expected in Washington in September, Trump may keep stalling on weapons sales to keep the door open with Beijing, while Taiwan's own lawmakers fight over the bill.