The $1.83 billion deal includes two Navy frigates, combat systems for mine-sweepers, missiles, amphibious attack vehicles and communications systems.
— John McCain (@SenJohnMcCain) December 16, 2015
China quickly criticized the deal, saying it interferes with its sovereignty over Taiwan.
"Washington's protection pledge is the only card that the island has for its defense, and it is a weakening one," read an editorial in China’s Global Times, a tabloid published by the ruling Communist Party's official People's Daily.
"Given the mainland's steadily growing military power, once the US gets involved in a conflict in the Taiwan Straits, it will face increasing costs and consequences."
The United States does not formally recognize Taiwan as an independent state, but the two have close security ties and Washington is legally committed to support Taiwan in defending itself.
One senior Beijing-based Western diplomat, speaking to Reuters on condition of anonymity and citing conversations with Chinese strategists, said the last thing China wanted was armed confrontation with Washington.
"They can't guarantee winning, and they would face huge domestic consequences" for a botched military operation, the diplomat said.
The arms sale is sure to further strain ties between the United States and China, which was already incensed over Washington’s decision to sail a Navy warship within 12 nautical miles of islands Beijing claims in the disputed South China Sea.
Taiwan's independence-leaning Democratic Progressive Party (DPP), which is likely to win January's presidential and parliamentary elections, says stronger defense capabilities for the island would give Taiwan better confidence to expand exchanges with China, Reuters reported.
Defeated Nationalist forces fled to Taiwan after losing a civil war with the Communists in 1949. Beijing has never renounced the use of force to bring what it deems a renegade province under its control.
But any Chinese attempt to forcibly occupy Taiwan would likely trigger a regional conflict, said Hammond-Chambers of the US-Taiwan Business Council.
"It's almost inconceivable that a fight over Taiwan wouldn't escalate and involve US and Japanese forces, maybe even Korean and Australian as well – very difficult to predict," he told Reuters.