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House Speaker Nancy Pelosi to visit Taiwan

Yahoo Finance Live anchors discuss the expectations for Nancy Pelosi’s reported visit to Taiwan on Tuesday.

Video Transcript

BRIAN SOZZI: And now, here are three things you need to know right now. Speaker of the House Nancy Pelosi is reportedly going to visit Taiwan today as part of her tour of Asia. China has already threatened military action over the visit, but the White House says they will not be intimidated. This, despite reports that President Biden asked Pelosi not to visit Taiwan.

Pelosi is the first Speaker of the House to visit the country since Newt Gingrich in 1997. Yahoo Finance senior columnist Rick Newman is here with us. And Rick, this comes at a contentious time between US and China relations. They haven't been great, but you can't imagine they're going to get any better after this.

RICK NEWMAN: Yeah, well, it's been a contentious time between the United States and China for, like, the last four or five years, going back to the Trump presidency. Let's just remind everybody-- China does not recognize Taiwan as a country. They say it's a breakaway republic, and President Xi Jinping of China favors reunification with Taiwan at some point, whether peaceful or not peaceful.

So you know, the United States and many other countries don't exactly recognize Taiwan as a country, but we have good relations with Taiwan. It is a democracy, and it's a very effective capitalist economy. We've been talking a lot about semiconductors for the last year and a half. Taiwan Semiconductor is basically the leading semiconductor manufacturer in the world right now. So they have a lot of important companies.

And Nancy Pelosi, not entirely clear why she's going, but she has stood her ground and said I'm stopping in at Taiwan on my Asian trip. So she probably will be there in a matter of hours or minutes.

JULIE HYMAN: And we're showing the airport, by the way-- I just want to mention real quickly-- in Taipei.

RICK NEWMAN: Countdown clock.

JULIE HYMAN: Exactly. I think she's due to arrive in about an hour and a half or so. Excuse me, Brad.

BRAD SMITH: Yeah, no. No, not at all. So when we think about the markets and why they should be paying close attention to this, you get into the semiconductor side, but more broadly, there is a supply chain consideration here too with Taiwan.

RICK NEWMAN: This will probably blow over with no ramifications for markets. I mean, the real question at this point is, what will China's response to this visit be? I mean, she has kind of called President Xi Jinping's bluff, so he probably has to do something. I think the question is, will he just offer rhetoric, which I think is what most analysts expect, or will there be some actual action of some kind?

I don't think anybody should think China is going to invade Taiwan simply because the Speaker of the House of the United States paid a visit there. But who knows? They could try other things that would be more provocative. So we just need to get through this. And there are also significant ramifications for this with US-China relations but also with what's going on between Russia and Ukraine.

So it's a very complicated web of geopolitical decision-making here.

BRIAN SOZZI: Rick, good nugget from our folks at our DC bureau, noting this might be a legacy play for Speaker Pelosi. What do you think about that?

RICK NEWMAN: So the expectation there is, let's say, Democrats do lose the House of Representatives and Republicans take control. She will no longer be Speaker of the House by definition. And I think she's 82 years old. I mean, she's actually older than she looks, to her credit. But she's been around a long time, and she could retire.

So she could finally say I'm bowing out. And I mean, we're talking about Newt Gingrich, going all the way back to '97. So she would-- for years, she would be the highest-ranking US official to have visited Taiwan. And she may also be thinking, look, this gives my party, the Democratic Party, a little bit of tough on China credibility, which might be something that could be incrementally helpful in this year's midterm elections.

JULIE HYMAN: Now, in 1997, when Newt Gingrich went, Bill Clinton did end up sending a couple of warships, I believe, to the Straits of Taiwan to sort of send a signal about the situation after China was also reacting not very favorably to that visit. It seems like things are now even more tense now. So really, it comes down to the concern is over some kind of military confrontation, whether it actually ends up becoming that.

RICK NEWMAN: Yeah, let's tamp that down. That seems very unlikely right now. I mean, if Xi Jinping ever makes some kind of move to forcibly try to reunify Taiwan with China, it's going to be at a time of his choosing. It's not going to be in response to some relatively minor provocation by one official in the United States. And China would have a lot to lose by doing that.

I mean, China is watching very, very closely what's happening to Russia as they try to turn Ukraine-- basically do the same thing to Ukraine that people talk about China might do to Taiwan someday. Well, Russia has become, for the most part, an international pariah. It is cut off from the world's most advanced economies. It's making alliances with Iran.

Great. They can get some drones from Iran. But that's not-- look at all the Western companies that have left Russia. So does Xi Jinping want to risk that with regard to China? Probably not, and almost certainly not right now. So there could be some repercussions. I mean, China will respond to this somehow, but I don't think missiles are going to fly, and I would be extremely surprised if there was something dramatic like an effort to interdict Nancy Pelosi's airplane as it tried to land or something like that.

BRAD SMITH: All right. We've seen the Asian markets move lower here on the day. And then, additionally, the US futures for the equity markets also have been lower.

RICK NEWMAN: Eh, they might recover.

BRAD SMITH: Might recover. We're going to see that very closely once we get to the start of trading and throughout the rest of the day. Yahoo Finance senior economist--

RICK NEWMAN: Thanks, guys.

BRAD SMITH: --Rick Newman. Thanks so much, Rick.