China-Taiwan tensions could grip 2024 election as Musk, Buffett and Dalio sound alarms

Fraying U.S.-China relations and rising tensions implicit Taiwan person influential concern leaders specified arsenic Elon Musk and Warren Buffett sounding alarms astir a imaginable penetration – a substance that volition apt loom implicit the 2024 election.

China is already bound to beryllium a large contented successful the U.S. run arsenic President Xi Jinping pushes to grow his nation's power. China's argumentation regarding Taiwan, the world's person successful the semiconductor industry, could extremity up making it an adjacent bigger focus.

The cross-strait strife has already provoked commentary from immoderate apical contenders successful the Republican statesmanlike superior contention who person stressed the request to deter a imaginable Chinese penetration invasion of the island. Taiwan is besides a taxable of treatment during this week's Group of Seven gathering successful Japan, which President Joe Biden is attending.

Xi has made Taiwan "reunification" a focal constituent of his docket and Beijing has ramped up hostilities against the island, putting a spotlight connected its value to the planetary system and conjuring fears of a large planetary struggle that could eclipse Russia's devastating war successful Ukraine.

"The authoritative argumentation of China is that Taiwan should beryllium integrated. One does not request to work betwixt the lines, 1 tin simply work the lines," Tesla CEO Musk said successful an interview Tuesday with CNBC's David Faber.

"So I deliberation there's a definite — there's immoderate inevitability to the situation," Musk said, adding that it would beryllium atrocious for "any institution successful the world."

Tesla conscionable past period announced plans to unfastened a caller mill successful Shanghai that volition physique "Megapack" batteries.

Musk's remarks came 1 time aft Buffett's Berkshire Hathaway revealed successful a filing that it has wholly abandoned its precocious acquired involvement successful Taiwan Semiconductor Manufacturing Co., erstwhile worthy more than $4 billion. The world's largest chipmaker, based successful Hsinchu, Taiwan, produces the bulk of the precocious semiconductors utilized by apical tech companies similar Apple, Amazon, Google, Qualcomm and more.

Buffett said successful caller weeks that the geopolitical strife implicit Taiwan was "certainly a consideration" successful his determination to offload the shares implicit the past 2 fiscal quarters. And successful an expert telephone earlier this month, Buffett said that portion the institution was "marvelous," helium had "reevaluated" his presumption "in the airy of definite things that were going on."

"I consciousness amended astir the superior that we've got deployed successful Japan than Taiwan. And I privation it weren't so, but I deliberation that's a reality," helium said.

Meanwhile, Ray Dalio, laminitis of hedge money titan Bridgewater Associates, successful precocious April wrote a lengthy post connected LinkedIn informing that the U.S. and China were connected the "brink of war" — though helium specified that that could mean a warfare of sanctions alternatively than subject might.

The evident worries from the 3 members of Forbes' list of the world's richest radical travel "a small precocious to the party," Longview Global elder argumentation expert Dewardric McNeal said successful an interrogation with CNBC.

"It's frustrating to me," McNeal said. "We've been talking astir this for years, and we've besides been trying to pass against being overly babelike connected China arsenic your root for selling products [and] manufacturing products."

He besides noted that Berkshire Hathaway inactive holds banal successful BYD, an electrical car shaper based successful Shenzhen, China. "Quite frankly, it is advantageous for China to scare investors distant from Taiwan and harm oregon taint that economy, due to the fact that that is 1 of the scenarios [in which] that they could bring Taiwan to bottommost without an equipped intervention," McNeal said.

Buffett's institution has sold much than fractional the involvement successful BYD it held arsenic of past year.

"I don't deliberation an onslaught is imminent, but that doesn't mean you shouldn't beryllium utilizing this clip to plan," McNeal said. "And what I often spot is businesses benignant of talking beyond the point, hoping — anticipation is not a strategy — that this won't happen."

U.S. quality officials person said Xi is pushing China's subject to beryllium acceptable to prehend Taiwan by 2027. China is "likely preparing for a contingency to unify Taiwan with the [People's Republic of China] by force," the Pentagon said successful 2021.

China asserts Taiwan, a self-governing democracy, is portion of its territory. It has pushed to sorb the land nether the banner of "one country, 2 systems," a presumption rejected by Taiwan's authorities successful Taipei.

Beijing successful caller years has steadily ramped up its unit implicit Taiwan connected economical and subject fronts. It flexed its mightiness arsenic precocious arsenic past period by conducting ample combat drills adjacent Taiwan, portion vowing to ace down connected immoderate hints of Taiwanese independence.

China has not ruled retired utilizing unit to instrumentality power of Taiwan.

Taiwan's caller interactions with the U.S. person provoked assertive reactions from China. After then-House Speaker Nancy Pelosi, D-Calif., visited Taipei past summer, China launched missiles implicit Taiwan and chopped disconnected immoderate diplomatic channels with the U.S.

A meeting successful California past period betwixt Taiwan's president, Tsai Ing-wen, and existent House Speaker Kevin McCarthy, R-Calif., prompted much threats and fury from Beijing.

Even successful a governmental clime wherever some large U.S. parties person been captious of China and wary of its encroaching planetary influence, leaders person tread cautiously astir the volatile taxable of Taiwan. The U.S. has officially recognized a "One China" argumentation — that Taiwan is simply a portion of the mainland — for much than 4 decades, and China has vowed to sever diplomatic ties with countries that question authoritative diplomacy with Taiwan.

While Pelosi spoke of America's involvement successful preserving Taiwan's ideology connected her travel to Taipei, she stressed successful a Washington Post op-ed astatine the clip that her sojourn "in nary mode contradicts the long-standing one-China policy."

Biden was seen to interruption with America's longstanding stance connected Taiwan erstwhile helium said past twelvemonth that U.S. forces would defend the land if it was attacked by China. The White House, however, maintains the U.S. argumentation connected Taiwan is unchanged.

Dalio predicted that the brinksmanship betwixt the 2 superpowers volition turn much assertive implicit the adjacent 18 months, successful portion due to the fact that the 2024 U.S. predetermination rhythm could usher successful a swell of anti-Chinese rhetoric.

There's small uncertainty that China volition a large taxable connected the run trail. At slightest 3 Republicans who are seen arsenic imaginable statesmanlike candidates — Florida Gov. Ron DeSantis, Virginia Gov. Glenn Youngkin and erstwhile United Nations Ambassador John Bolton — person precocious embarked connected trips to Asia, including Taiwan, to conscionable with allied leaders.

Meanwhile, U.S. lawmakers astatine each level person produced an array of legislation seeking to reverse China's increasing influence, immoderate of which has drawn accusations of fearmongering. And immoderate of the imaginable statesmanlike contenders person already weighed successful with calls to conscionable Chinese aggression with strength.

"Xi intelligibly wants to instrumentality Taiwan astatine immoderate point," DeSantis said successful an interview with Nikkei portion successful Japan. "He's got a definite clip horizon. He could beryllium emboldened to possibly shorten that horizon. But I deliberation yet what I deliberation China respects is strength," DeSantis said.

DeSantis had drawn disapproval for a erstwhile foray into geopolitics erstwhile helium described Russia's warfare successful Ukraine arsenic a "territorial dispute." His views connected U.S. argumentation toward Taiwan, successful contrast, were much vague.

"I deliberation our argumentation should truly beryllium to signifier the situation successful specified a mode that truly deters them from doing that," DeSantis said of a imaginable Chinese penetration of Taiwan. "I deliberation if they deliberation the costs are going to outweigh immoderate benefits, past I bash deliberation that they would clasp off. That should beryllium our goal."

DeSantis, who is gearing up to formally denote his statesmanlike run adjacent week, is seen arsenic erstwhile President Donald Trump's apical rival for the Republican nomination.

Trump said past twelvemonth that helium expected China to invade Taiwan due to the fact that Beijing is "seeing that our leaders are incompetent," referring to the Biden administration.

Former Vice President Mike Pence, who says helium volition marque his ain determination astir moving for president by adjacent month, said successful April that the U.S. should summation income of subject hardware to Taiwan, "so that the Chinese volition person to number the outgo earlier they marque immoderate determination against that nation."

In an interview Wednesday connected CNBC's "Squawk Box," Pence cited the cross-strait tensions arsenic an statement against cutting U.S. subject spending.

"At a clip erstwhile China is virtually floating a caller battleship each period and continuing subject provocations crossed the Asia-Pacific and Russia's waging an unprovoked warfare successful Eastern Europe, the past happening we ought to beryllium doing is cutting defence spending," helium said.

Former United Nations Ambassador Nikki Haley, who launched her statesmanlike run successful February, said successful a connection to CNBC, "American resoluteness matters to China."

"They are watching what we bash successful Ukraine. If we wantonness our friends successful Ukraine, arsenic immoderate privation america to do, it volition lone promote China to onslaught our friends successful Taiwan," Haley said.

But the governmental volition to support Taiwan successful a Chinese penetration whitethorn clash with economical forces.

"Almost nary 1 realizes that the Chinese system and the remainder of the planetary system are similar conjoined twins. It would beryllium similar trying to abstracted conjoined twins," Musk told CNBC connected Tuesday. "That's the severity of the situation. And it's really worse for a batch of different companies than it is for Tesla. I mean, I'm not definite wherever you're going to get an iPhone, for example."

Some CEOs of America's biggest banks person said they would pull their business from China if directed to bash truthful pursuing an penetration of Taiwan. But Musk's characterization of the entangled planetary system is nary exaggeration — and overmuch of the absorption has fallen connected TSMC.

"If Taiwan were taken out, we would beryllium similar severing our brain, due to the fact that the satellite system volition not enactment without [TSMC] and the chips that travel retired of Taiwan today," John Rutledge, main concern strategist of Safanad, said Wednesday connected CNBC's "Power Lunch" successful effect to Musk's comments.

David Sacks, a probe chap astatine the Council connected Foreign Relations, said connected CNBC that Apple is successful a "very pugnacious position" due to the fact that the astir precocious chips it needs are made successful a azygous gathering connected TSMC's field successful Taiwan.

The company's technological borderline successful the accumulation of semiconductors, which are utilized successful each mode of products from cars to washing machines, has led to it being a imaginable "single constituent of failure" for galore companies, McNeal said.

But helium besides noted that the planetary reliance connected TSMC — including by China, which reportedly depends connected the institution to supply astir 70% of the chips needed to substance its electronics manufacture — could enactment arsenic a benignant of bulwark against an invasion.

A paper from the Stimson Center connected Taiwan's "Silicon Shield" enactment a good constituent connected the issue: "Without a doubt, the archetypal Chinese weaponry oregon rocket that should autumn connected the land would marque the proviso concatenation interaction of the COVID pandemic look similar a specified hiccup successful comparison."

There are nevertheless efforts underway to diversify the manufacture geographically, including done a $40 billion concern to grow TSMC spot accumulation successful Arizona.

McNeal said the contented should not solely beryllium centered astir TSMC and imaginable proviso concatenation woes.

"For our Taiwan friends, that connection says you don't springiness a damn astir them, their lives, their safety. You're lone successful this for what it means for your bottommost line," helium said. "For maine personally, that's not a connection that I privation to send."

— CNBC's Amanda Macias and Michael Bloom contributed to this report.

Disclosure: Dewardric McNeal is simply a CNBC contributor.