Biden says U.S. is prepared to militarily defend Taiwan

Yahoo Finance Contributor Kevin Cirilli joins Yahoo Finance Live to break down President Biden’s recent trip to Japan, the Indo-Pacific economic deal, and the latest on the baby formula shortage.

Video transcript

JULIE HYMAN: Now, there's something that's going on this morning-- that's thing number two this morning-- that maybe in other times would have caused a little bit more volatility. But it's not happening this morning. And that is President Biden, who says the US is prepared to defend Taiwan with military force should China attempt to invade that nation.

- Are you willing to get involved militarily to defend Taiwan if it comes to that?

PRESIDENT BIDEN: Yes.

- You are?

PRESIDENT BIDEN: That's the commitment we made.

JULIE HYMAN: And President Biden made that remark during a conference in Tokyo alongside Japanese Prime Minister Fumio Kishida, which was met with anger from Beijing and praise from Taipei. It was also met with some backpedaling from his own administration representatives.

Our Kevin Cirilli, who's a correspondent for Yahoo Finance, is joining us now. Kevin, you know, it was sort of an off the cuff remark, but it could have some bigger implications.

KEVIN CIRILLI: Absolutely. And I think, candidly, the reaction this morning here in Washington DC, Julie, is that President Biden is feeling emboldened by bipartisan support on Capitol Hill for support for Taiwan. And if you put it through the broader geopolitical prism, something that you and I have been talking about now for several weeks with the situation of Russia's aggression against the Ukraine and the United States ability to rally NATO and support Ukraine, clearly President Biden and the State Department sending a signal to Xi Jinping that that same type of strong coalition would stand with Taiwan should China do any aggression against Taiwan. This is something that I think in the broader prism, the Chinese for their part, have tried to suggest that they would be able to take a similar approach to what they have done to Hong Kong in recent years. But clearly, President Biden delivering a message that the United States is going to very much stand behind and with Taiwan should China continue with increasing their aggressions.

JULIE HYMAN: So obviously there are sort of economic implications from that for our purposes as we watch the markets, the relationship between the US and China. And also on that front, the President had gotten some more welcome remarks from Beijing, I guess, over talks that maybe some of the tariffs would be dropped. And at the same time, he's forming a new economic block with other Asian nations. So walk us through what's happening there.

KEVIN CIRILLI: Well, and specifically as it relates to the Indo-Pacific trade pact, the administration is saying that countries will be able to opt-in or opt-out dependent upon various specific parts of the program. But if you look at supply chains as a whole, of course, everybody looking at Operation Fly Formula here in the United States-- as it relates to China, specifically on semiconductor chips, specifically on Apple's ability to move some of their supply chains because of the draconian measures of the Communist Party's COVID restrictions. In China, a lot of uneasiness in terms of how China has chosen to handle their supply chains.

And so with Taiwan specifically in semiconductor chips and TSMC, there's a huge economic implication to what President Biden said in the last 12-hours for Taiwan.

- Kevin, I've got to make a hard pivot here because I understand that you're also monitoring the baby food shortage supply situation. I'm wondering any updates on that over the weekend here?

KEVIN CIRILLI: Yes, in fact, President Biden has said that the first flight from Operation Fly Formula with more than 70,000 pounds of infant formula has landed in Indiana. So clearly, again, supply chains, which have been so incredibly pressured in the last couple of years, this is just one area where the United States is learning very quickly. And unfortunately, that that diversification and overreliance on certain countries and on certain companies can prove vulnerable and significant risk for the United States.

But that, the baby formula issue, the administration is hoping to get in front of this week. Again, the first shipments of Operation Fly Formula having now touched down in the United States.

- All right, we want to thank you for that report. Kevin Cirilli, Yahoo Finance contributor.