If the US considers Taiwan critical to its interests and is willing to forego the cash its companies are making in China, then the logical move for them is to end strategic ambiguity over Taiwan. That means full decoupling and drawing a MAD line over Taiwan.
That would put the PRC in a pretty tight spot. The ball is in their court. 300 warheads against 5000 and the world’s most formidable ABMD shield against them. Taiwan starting to move towards independence. What do they do?
If the US (and the majority of American people - it's important since you're talking about MAD here, not some military intervention in a third-world country) believes it is worthwhile to go MAD for an island thousands of miles away from its homeland, which the vast majority of the countries in the world and UN recognize as legally part of China, including the US, think about how strong China and Chinese people feel about Taiwan and how far it would go to defend its sovereignty and territory?
I can tell you: a million times more, to start with.
Maybe this is a bit too hypothetical and it's hard to test it in reality until it happens. Let's look at some track records.
In 1950, barely a year after the founding of the People's Republic, China entered Korea War to fight against the US, because its security and territory were under threat. At the time, China was a poor agrarian country against the world's most powerful military machine and the only country with nuclear weapon then. The result: China fought to repel the US-led military to the 38th parallel. Subsequently, during the Vietnam War, the US made sure it did not cross the 17th parallel, the dividing line between North and South Vietnam for fear of Chinese intervention.
In 1969, China and the USSR had a serious border conflict. At the time, the USSR had overwhelming military advantage over China, including nuclear weapon. In fact, the USSR army tank groups were only hundreds of miles from Beijing. Did you remember that China backed off?
In 1979, a few years after China emerged out of the Cultural Revolution, China initiated a "punishment" war against the Vietnam due to latter's aggressive behaviors in Southeast Asia particularly its invasion of Cambodia. Mind you, at the time, Vietnam was in a military alliance with the USSR, the superpower of the day. Did the USSR entered the war against China? Nevertheless, China was prepared for the eventuality that didn't occur.
China will go to thermal nuclear with any country that threatens to go nuclear against its core interest, which includes Taiwan. No, I didn't say this here first. In 1995, General Zhu Chengwu, the grandson of the late Marshall Zhu De (one of the founding generals of the PLA, commander-in-chief of PLA during the revolutionary years) said that the US would not sacrifice Los Angles for Taiwan while China would sacrifice all the Chinese cities east of Xi'an for Taiwan. China didn't have many nuclear warheads that could reach the US at the times, and it's been very rare that China threatens with nuclear war with any country for anything - after all China has a no-first-use nuclear policy. This just demonstrates the will of China to defend its sovereignty on Taiwan.
How about the 300 vs 5000 warheads?
First of all, are 300 enough to destroy a country or at least the majority of the population centers? Do we even know China "only" has 300? We know even Pakistan or India has over 100. We're assuming the US would entertain such an exchange. Taiwan to China and US is not Europe to USSR and the US during the Cold War. The relationships are fundamentally different. I believe you're smart enough to understand this.
Second, that China has only 300 is not because it does not have the technical know-how, manpower, industrial or financial resources to build more. It is based on its assessment of the strategic situation and self-restraint. Should that assessment change, the number can be drastically increased in relatively short period of time. The world should take comfort that China is very rational country led by rational people. But the restraint and rationality should not be taken as weakness.
Let's take another 10,000 steps back. Let's say China took military action to land on Taiwan and failed (highly unlikely) or that for some unknown or unknowable reasons that China decided not to take immediate military action should Taiwan declare independence or the US abolishes its ambiguous Taiwan policy (there has no ambiguity from China's perspective, China always prepares for external intervention). It can always take some times and produce more weapons, conventional or non-conventional, to come back to fight for Taiwan, again and again. Or you believe China would be "deterred" to accept Taiwan's independence?
You should calm down and back off on Taiwan issue, not to push to the point of threatening MAD. You questioned why a lot of people here care about a far away island. That's ironical because a lot of people here have very close relationships with China/Taiwan, while you're just an outsider (Ok, you visited Taiwan once). Yet why are you so bothered with Taiwan's separation from China? Think in another way, if you as a European, cares so much about keeping Taiwan separate from China, how much more do the Chinese or people who have much close links with China including nationality, family & friends, ethnicity, culture care about Taiwan NOT separating from China?