Sorting Out the United States–China Relationship

Commentary by William Alan Reinsch

Published July 28, 2025

The question I am often asked these days is, "What is our China policy?" Unfortunately, there is no clear answer, but the best word to describe it is incoherent. On the one hand, many in the Trump administration take a hawkish stance toward China, most of whom see China as an existential threat to the United States that must be blocked by any means. That includes tariffs and technology, and investment restrictions. For that group, the policy is clear: ensure that the United States remains the preeminent global power militarily and economically and take steps to prevent China from gaining on the United States. How best to do that is the subject of vigorous internal debate, but at least the policy goal is clear.

On the other hand, we see Donald Trump, who seems to buy into the China threat argument but, at the same time, believes that if he and Xi Jinping could just sit down together, they could work out a deal that addresses many of the issues that divide the two countries. As a result, he has pulled his rhetorical punches on China and Xi personally in ways we have not seen with other countries. We have also seen actions against China yo-yoing up and down. Tariffs went up as high as 145 percent and then came back down. Additional export controls were abruptly imposed and then removed just as abruptly. These actions correlate directly with progress, or lack thereof, in the trade negotiations.

So, let's try to unpack some of that by looking at the prospects for a deal and then specifically at how U.S. export controls might be part of that.

First, let's set aside expectations of a comprehensive Trump-Xi deal. U.S. demands on China have not changed much in 30 years-end subsidies and forced technology transfer, stop stealing intellectual property and hacking into Western computer systems, treat foreigners fairly, and "normalize" its economy by increasing domestic consumption and reducing overcapacity. China has not agreed to those demands or has failed to carry out its promises when it has. In turn, China's demands of the United States, that we relax our technology and investment controls and stop taking "unfair" actions against them, are not acceptable to the United States.

That means a big deal is impossible, but a small one is not necessarily out of the question. During Trump's first term, China took advantage of negotiations that ended in unfulfilled purchase promises-and would likely do so again. For Trump, the appearance of a win often matters more than the substance, so even a modest purchase agreement could be framed as a major victory. Currently, I think that is the most likely outcome-the usual drama, perhaps more yo-yoing, and then a minor deal, which will be overstated. A variation of that could be a series of mini-deals, since each lower-level encounter-Geneva, London, Stockholm, or wherever-apparently needs to conclude with some sign of progress, however small.

Another reason a deal will be small is that China has begun to employ its leverage more aggressively. The most recent meetings produced a ceasefire on tariffs and mutual concessions-industrial magnets for students and minerals for export controls. That episode brought home bluntly what China has been saying subtly for two years-that they have stuff that is essential to our manufacturing supply chains and our national security, and they are willing to weaponize that trade, just as Trump has weaponized U.S. trade. That reality has led to U.S. concessions on export controls, particularly on semiconductors such as the H20 Nvidia chip, that have annoyed China hawks and angered Congress.

At the same time, the United States should not lose sight of the fact that a deal is not the most important thing. Meeting the challenge China presents also requires the development of domestic capabilities in the security-related sectors where we currently depend on China, which the administration to its credit is pursuing. The problem is that it will take years, and the policy uncertainty Trump has created with his tariffs is contributing to the delay. The administration could speed up the process if it were more willing to work with trusted trade partners-third countries the United States could rely on-rather than insisting everything be reshored.

Finally, revising U.S. export control policy is worth considering, despite the doom prophecies from officials with a hawkish stance toward China. U.S. policy for 30 years was to keep U.S. adversaries a generation or two behind us technologically while we ran faster. That meant variable controls, which were relaxed in stages as our own technology advanced. The Biden administration changed that and installed fixed performance parameters. That introduced enormous complexity into the regulatory process that complicated companies' due diligence efforts and accelerated China's efforts to develop its own technologies independent of the United States.

Secretary of Commerce Howard Lutnick's view that the United States can still "addict" China to U.S. technology underestimates China's progress in indigenization. That ship has sailed. But he is conceptually right that at this point the better policy is to "flood the zone"-outmaneuver China by getting the rest of the world to adopt U.S. technology by making it widely available. The administration's AI Action Plan and recent agreements with the United Arab Emirates on AI chips make clear that this is our new strategy in that sector.

That has its perils, the main one being that it facilitates leakage that would allow China to obtain U.S. technology illegally from third countries. The United States will have to choose whom it trusts very carefully, but if it can do that and simultaneously continue its own advances in critical technology-no easy task in the face of big cuts in the federal research budget-it has a good chance of being able to maintain its leadership. And in the long run, that will be more important than persuading China to buy more soybeans.

William A. Reinsch is senior adviser and Scholl Chair emeritus with the Economics Program and Scholl Chair at the Center for Strategic and International Studies in Washington, D.C.

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