My assessment is that the Taiwanese government and military is thoroughly penetrated, and no such programme could be kept secret. And which plausible foreign partner is going to produce the nuclear weapons for Taiwan?
But let's say your scenario somehow happens and Taiwan ends up with a small number of nukes AND also delivery vehicles.
These would likely still be tactical-level bombs with small warheads in the beginning. In such a scenario, I still think that this wouldn't deter the Chinese military. Look at how South Korea's doctrine, which is a lightning, pre-emptive conventional strike against North Korea's nuclear weapons and missiles.
As I said, the scenario of China imposing a trade embargo on the USA, is if China thinks a war is inevitable and also imminent.
1. If the war happens, then China made the right move
2. If there is no war, because China successfully deterred the USA, then again, China made the right choice, because a war has been avoided
You have to distinguish between policymakers and politicans in the American elites.
The politicians in the USA are either:
1. thoroughly compromised by the Israel lobby
2. religious nutjobs that believe Israel must exist for their biblical prophecies to come true
Also remember that in the attacker versus defender cost equation, defending Israel is far more costly.
This will divert the US military towards the Middle East and away from the Western Pacific.
I don't see how rational American policymakers will be "happy" at this scenario.
First off, Iran would welcome an inflow of Chinese weapons. After all, they've just been humiliated and are looking for vengeance. Note Israel is 1000km from Iran, with is comparable to the distances from China to Japan. And if Iran were to effectively become a Chinese proxy, I reckon the supply routes from Iran-Iraq-Syria-Lebanon would be reopened.
But again, I don't expect this scenario to happen, unless China sees a war with the USA as inevitable.
Here's the crux of the issue.
What happens if the American security guarantee simply isn't credible?
Remember that China can already project far more military power onto the Korean peninsula than can the USA.
That extends to the Western Pacific in general.
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My guess is that if required, China can successfully impose an indefinite air-sea blockade on Korea, Japan and the Philippines. And that the US military will be unable to break this blockade.
And in a long war, Chinese industry would be able to build a bigger Navy than the US, despite US attempts to attack Chinese industry.
Then the US Navy would be defeated in a blue-water naval battle in the Pacific.
So the US would lose control of global sea lanes and the US would then be subject to a Chinese naval blockade.
