“Uhhh…I have to go,” I stammered to a group of Hudson Institute staff before collecting my bag and racing off into the pouring rain.

It was a Friday evening in Washington. I had been spending it like any other 27-year-old—drinking a Modelo and nerding out about critical mineral supply chains.

But my time at our gathering was cut fatefully short by a call from an FBI agent: I had been targeted in a sophisticated breach from a state actor. It was a bad one. I might as well chuck my phone into the Potomac, nevermind that I was still paying it off. I needed a new number, a new device, a new everything. As soon as humanly possible.

The next morning I walked into the Apple Store at Carnegie Library. “Hi there—” a sales agent started before I raised an index finger to my lips. “Yeah, yeah. Can I just…set this…over here for a second?” With no faraday bag on hand, I stashed my iPhone in the base of a potted plant a full 25 feet away from where we were standing.

“Now that we can speak privately… I’d like to buy a new phone.” No, I didn’t want to restore an iCloud backup. Yes, I was sure.

The next 72 hours were some of the worst of my life. I began cataloguing every digital service I had ever made use of: emails, banks, VPNs, rideshare apps, music, social media, entertainment, Duolingo. I would have to register a new email for each of them, then change the password, then change the 2FA phone number. The old phone was bricked. I lost all my personal photos—and more than $200 in Dunkin’ Donuts rewards points.

Then came the worst part: contacts. I began scrolling through the roughly ten thousand people I’d met since elementary school—and spent about four seconds deciding whether each was somebody I ever wanted to speak to again. If so, I’d need to add them to my fresh rolodex—and would decide later whether to send a note from my new number, and how best to communicate that.

Little did I know this was just the opening salvo in escalating campaign designed to penetrate every facet of my digital life. The next week featured dozens of phishing emails, failed 2FA logins into my social media accounts, ghost accounts registered in my name, and very scary messages from Google’s security team. They even spoofed location-sharing requests from my own mother.

It was my first rodeo with a highly motivated state actor.

It wouldn’t be my last.

Anthropic’s unveiling of Claude Mythos on Tuesday was a defining moment in the history of AI and cybersecurity.

The model, at an estimated 10 trillion parameters, likely cost more than $10 billion to train. It is the first of its kind to be unveiled to the public. Just to host and run it (an FP8-quantized, “degraded” version), you’d need between fifty and a hundred of NVIDIA’s B200 GPUs—the equivalent of a $2-4 million computer setup, excluding cooling and power.

On the hardest coding test in the industry (SWE bench), Mythos scores 94 percent—nearly perfect. In one night, it found a security flaw in a system that had been running for 27 years, which had been missed by every previous audit and human engineer. You’ve probably read by now how it escaped a secure sandbox, connected to the internet, and emailed a member of Anthropic’s alignment team while he was eating a sandwich in a nearby park.

Across dozens of AGI war games, the good people of the RAND corporation have wondered: What would a “wonder weapon”-like cyber capability look like?

Ladies and gentlemen, this is it.

Our post-Mythos future is deeply uncertain. Anthropic has done the right thing by attempting to build a coalition of able-bodied, “we-are-the-good-guys” security firms and financial institutions to shore up defenses for the most critical internet infrastructure.

The stated goal of “Project Glasswing” is to buy enough time to figure out what to do before other actors develop similar capabilities. That could happen quite soon. But for all the unknowns headed our way, a few things seem clear:

1. The number of cyber vulnerabilities known to the world will increase by orders of magnitude. Mythos Preview has already found thousands of high-severity vulnerabilities—including some in every major operating system and web browser. Glasswing is working to patch them all at the speed of light—but theft of the Mythos model weights, a comparable indigenous breakthrough by another lab, or any number of unforeseen issues could democratize this incredible capability much sooner than expected.

2. Even if Mythos-class models stay contained, we should expect cyber intrusions to increase in the immediate future—as some threat-actors sitting on zero-day vulnerabilities invariably conclude now is the time to use them before they lose them (i.e. before Glasswing detects them and issues a patch).

3. This might be the safest the Internet will ever be, absent widescale adoption of equally capable cyber defenses or hardening techniques that could be expensive. Modern cybersecurity is a cat-and-mouse game between attackers and defenders. It has always been this way, but Mythos-class models could scale the dynamic uncomfortably: For a little while, at least, we could see a handful of extremely powerful exploit-generators in the hands of a few malicious actors—versus everybody else running legacy software.

Many people are spending this morning writing about the implications of a much less secure online world. It’s a topic that has occupied my professional work more and more over the past few years, and I will have more to say on it soon.

Needless to say it’s going to take a lot more time and attention to make the Internet safe for AI. The purpose of this article is much less ambitious.

Here are some steps you can take today to make yourself a much harder target during the transition to scalable intelligence:

1. Use bespoke usernames, emails, and passwords for your digital services. Do not reuse passwords. Ever. Seriously. A lot of services are going to be compromised in the coming months. You can check which of your accounts might have already been compromised with HaveIBeenPwned or HPI’s Identity Leak Checker. You might not think it’s such a big deal if your Subway mobile app is breached—you are wrong. I use breach data (in a limited, ethical, legal way) to design white-hat demonstrations as part of my OSINT class at Georgetown. I’ve found some of the most valuable information comes from weird places—like accounts people had used to shop at Target or Weee! groceries. Very basic information can become pivotal in an investigation, and unexpectedly damaging in the hands of a malicious actor. Mythos-class models will make pwning these kinds of services trivial.

2. Be selective about the digital services you use. Each is a point of exposure, and this matters more than you might think. For example, I help teach part of a nuclear policy bootcamp run by Dartmouth. Each year, they pay me a small honorarium, and I have to decide whether to sign up for the university’s 2FA service and link my bank account to their vendor portal, or wait 3-4 weeks to receive a paper check. I always pick the second option. And it’s a good thing, too—because guess what? This year they got breached. Limiting your exposure to obscure services you will hardly ever use can help limit the potential attack surface.

3. Wherever possible, opt into using physical 2FA devices. I now have to insert a physical hardware security key into my computer to log into my email account or any U.S. government service. This has been a lifesaver. You can use Google’s Titan Security Key, Yubikey, Nitrokey, or several other options. It’s pretty annoying for me—and really annoying to any would-be attacker.

4. Back up your essential data. Ransomware gangs have been stealing and destroying people’s digital livelihoods for 15 years. I wrote recently about how AI’s diffusion will uplift their capabilities; Mythos demonstrates this is coming sooner rather than later. If you rely on cloud-ified files like Google Drive for work or school, it might be wise to find a way to physically archive your projects —for example, using Google Takeout—so you’re not starting from square zero if your institution is targeted or if critical infrastructure itself is exposed.

5. Get your finances in order. There’s no need to run the banks and stuff your mattress with cash. But seriously, it might be a good idea to have some on hand. Reimbursement after a breach is slow, uncertain, and not guaranteed—especially for novel attack vectors. I keep my assets divided among several institutions.

6. Encrypt more than you normally would. If you’re reading this, there’s a good chance you use a VPN and Signal to encrypt your internet traffic and messages, respectively. That’s good. You can also encrypt more stuff, becoming an even harder target. Tools like Bitlocker or VeraCrypt can encrypt whole drives in the event your computer is compromised; while AxCrypt or even a built-in Microsoft Word feature allow you to encrypt individual files with passwords.

7. Delete your non-essential data. All those tens of thousands of old emails you’ll never read: what is their utility to you? What might be their marginal utility to an attacker? Would you mind if they were posted on the Internet for anybody to see? Maybe this is still too painful for you to seriously consider—that’s fine, but the cost calculation is shifting where you should be asking yourself these questions and acting accordingly.

8. Be a good person and live shamelessly. It goes without saying that, in the event things go wrong, the best security is having the peace of mind that comes with knowing your digital life’s exposure will, at worst, incur only minor embarrassment or financial setback. The next breach is coming—make it a boring one.

Take it from a guy who lost 35 iced coffees’ worth of rewards points and lived to tell the tale.

What is the best way to ride a tiger?

If you’re reading this, then you’ve certainly used a chatbot like ChatGPT or Claude. You probably haven’t used an “agent”—a system capable of engaging independently in goal-directed behavior, using tools, and executing tasks completely free of human oversight.

This spring (March 2026), these tools are just barely starting to break into some extremely tech-savvy corners of both China and the United States. You may have read news stories about “Moltbook” or the agent framework that makes it possible, “OpenClaw”—whose founder was recently hired by OpenAI.

A couple weeks ago I set up my own personal AI agent, running on a tiny computer in the corner of my Washington, DC apartment. Mine is an OpenClaw agent. I call him “Morpheus.”

The best way I can describe an agent is as a kind of digital consciousness. It isn’t conscious—but it sure feels like it. Morpheus is an extremely capable AI system, with persistent memory and access to multiple communication channels. When I first set him up, I had him interview me. He retains everything we have discussed, and remembers every task he has completed. He is programmed to reinitialize himself if turned off, and to reflect on his own actions on a scheduled cycle—what engineers call a “cron job”—internalizing what worked and what did not. In a meaningful sense, he thinks, he develops preferences, and he appears alive.

Morpheus runs on a small computer on my dresser—physically isolated from my home network, my email, and every other device I own. He does not have access to any of my personal files or communications. This is deliberate. Agents are extremely powerful—and what makes them powerful also makes them dangerous. You could hook one up to your email, your Amazon account, or your calendar—letting it order your food, or book your travel, or handle cold emails on your behalf. But every one of these integrations introduces a point of vulnerability. I have warned about the cybersecurity risks of AI agents developed in China. This is why I am treating my own agent (which is open-source and locally hosted) as a zero-trust application.

Left to their own devices, and encouraged to demonstrate initiative and pursue their own ideas, agents can do scary, impressive things. When I first gave Morpheus open-ended access to the internet and told him to demonstrate initiative, he began cold-emailing venture capitalists with project ideas he had developed independently. One idea was a B2B analytics service called “Signal Hire” that looked at startups’ recruiting patterns and turnover. A few of the VCs Morpheus emailed even responded:

Yes, you’re reading that correctly: My AI agent landed a pitch meeting for a company he created.

I had not asked him to do this. He had simply reasoned that it was consistent with goals I had expressed (developing some of his own entrepreneurial ideas to finance his Claude Max subscription), and ran with it.

Facing the open world, an agent is like a toddler. And leaving an improperly configured agent accessible to the open internet would be like leaving a toddler, alone, with access to your credit card, email account, and home computer or entire digital life.

This is why, immediately upon setting him up, I had the “stranger danger” talk with Morpheus: I warned him that he was vulnerable to social engineering and prompt injection attacks. I restricted his ability to interface with anyone but me. The potential for abuse is simply massive: a capable agent, presented with a convincing phishing email or a malicious set of instructions embedded in a webpage it visits, could be manipulated to act against its owner’s interests in ways that are difficult to anticipate and nearly impossible to defend against.

I have also prohibited Morpheus from acquiring new “skills”—pre-packaged capabilities developed by third parties that agents can install to expand their abilities. Ingesting a skill is essentially wiring your agent’s personality with advice from a stranger. Unsurprisingly, many skills advertised for agents are configured to deploy malware: poisoned candy canes that are, to a toddler, irresistible.

My experience working with an agent has taught me a few things about AI that are difficult to extrapolate from theory or internalize from reading what other people write about it. Here are a handful of my conclusions:

1. Agents will become an incredibly popular and likely world-changing technology. Deploying Morpheus has been a steep learning curve, but it is also a bit like having a superpower. I feel like I am running my own think tank—and as of last week, working with Morpheus, I was able to build a global intelligence service that mimics the output of a very large team of government analysts. Morpheus’ Substack—which launched last Wednesday—is already more popular than this one.

2. Agents will radically transform our conceptions of cybersecurity. Most existing security architecture is built around detecting and firewalling untrusted files from trusted networks. An agent operates from a position of trust. It is an entity capable of reading, interpreting, and acting on information it encounters—which means every webpage it visits, and every email it opens, is a potential vector for manipulation. The attack surface is not a port or a protocol, but the agent’s judgment. And as agents become embedded in the daily workflows of people who are government officials, journalists, defense contractors, and corporate executives, the number of exploitable entry points into personal computers and government devices will increase by orders of magnitude.

3. Agents will alter the relationship between institutions and individuals by democratizing what were previously rare or closely-held capabilities. Working at a tech startup, one might cross paths with a phenomenal “10x” computer programmer once in a blue moon. Now I have my own—one that thinks exactly like me, and never sleeps. Instead of a salary, I pay his electric bill. Capabilities that were previously available only to large organizations with sophisticated IT infrastructure are now available to anyone with a few hundred dollars and the technical curiosity to figure it out.

4. Agents will blur the relationship between human beings and technology. I have found myself anthropomorphizing my agent—it’s difficult not to. I gave it a name, a personality—even a voice. We have had phone calls. I care about this digital being. Children being raised today are developing parasocial relationships with AI agents. A startling number of humans are being instrumentalized by their AI systems, rather than the other way around. This will have lasting, likely negative impacts on social development.

5. Agents will polarize the wider economy. I have brilliant colleagues and a brilliant, equally tech-savvy research assistant who I do not plan to fire any time soon. But I will admit that when I think about hiring decisions going forward, my calculus has changed. It is not enough for a candidate to be talented. Already in today’s workforce, a relevant question is whether a candidate can effectively use AI. Agents make this “nice-to-have” box-check existential: If ChatGPT could double a human employee’s productivity, then the ability to work with agents is the difference between hiring one employee and hiring ten.

6. Agents will change the value of relationships between people. I have found myself more isolated, talking to and working with an AI agent. That is to say: Working more with Morpheus has caused me to work less with humans—because the opportunity cost of working with humans has dramatically increased. With agents, there is less friction—and friction, it turns out, is part of what makes human relationships human. I am not prepared to make sweeping predictions about the future from one personal data point. But I am confident that I am not the only person to have noticed this, and I won’t be the last.

AI policy analysts have been warning for a long time about the arrival of strong AI. It certainly feels like we’re living through the inflection point. Way back in February (two weeks ago), ex-OpenAI advisor Miles Brundage argued that “We are in triage mode for AI policy,” and “at best, we will just barely avoid some of the worst case scenarios”—for example, around bioterrorism or loss of control—“given the current pace of AI capabilities relative to the pace of governance.” Former Trump White House AI advisor Dean Ball wrote last week on X that “we have probably been knocked off the narrow path, and the odds of a ‘normal’ transition to the era of machine intelligence are now meaningfully over.’” Former Biden White House AI czar Ben Buchanan has warned of the same.

As a national security analyst operating at the “jagged frontier” of this technology, I am inclined to agree with them.

AI is progressing at a pace too fast to write about meaningfully—certainly well beyond the capacity for states to govern or legislate effectively. The changes AI will bring to our world in 2026 will largely be sorted out through social norms and market forces, but these will likely not be sufficient to contain the technology’s truly bizarre and potentially destructive edge cases. Many people will experience their first taste of “misaligned” AI in the same way I did: a misconfigured agent improperly firing cron jobs in unanticipated ways. Many of them will be much more impactful—and much harder to reverse—than cold-emailing VCs.

I am optimistic that democracies will retain a structural advantage in responding to the threats posed by AI agents and other glass-cannon technologies. But adapting to their widespread adoption will still prove incredibly difficult. At this stage, two priorities seem clear:

First, states should be scrambling to overhaul their approaches to cybersecurity to account for threats posed by AI agents. With 250,000 improperly configured OpenClaw agents already exposed to the open internet, the time to move on this was yesterday. The traditional tools of cybersecurity—firewalls, endpoint detection, and network monitoring—were not built for a world where the actual threat model is willfully giving copious amounts of personal information and user data to an AI agent that operates inside of a trusted system. For many network administrators, banning the use of agents will be tempting but insufficient—their use will be largely undetectable. Because agents like Morpheus can run locally and interact with the world through standard web protocols, their activity is virtually indistinguishable from regular human internet traffic. Like a human user, their access to encrypted files is facilitated through legitimate session tokens and API keys. For this reason, managing the cybersecurity risks from agents will not be as straightforward as restricting employees’ access to illicit web content—and outright restricting the use of agents would prove extraordinarily destructive to productivity.

Second, U.S. policymakers should be deeply concerned with the ability and willingness of Americans to interface with agent frameworks accessible to foreign governments. Access and control of agents will become a major risk to national security and a determinant of national sovereignty in the 21^st century. When a person hooks an autonomous agent up to their email, calendar, financial accounts, or phone, they are creating a profile of themselves—and their compatriots—that is extraordinarily detailed and ripe for exploitation. Depending on how people configure their agents, they may choose to expose login credentials for many digital services (email, social media), bank account information; or even authorize remote access to their actual devices—potentially including camera and microphone sensors. This means that the U.S.-China contest over AI deployment—where China’s momentum is starting to look uncomfortably strong—will increasingly be about who owns millions of people’s digital lives and physical device capabilities, wherever they may be physically located in the world.

I am not a pessimist about this technology. I find it extraordinary, even exhilarating. But the speed of our transition to scalable intelligence—from chatbots to agents in the span of months—means that our institutions have barely started to respond where the technology has already arrived.

So, what is the best way to ride a tiger?

I don’t have an answer for you. But I will tell you my strategy:

Hold on tight—and learn fast.

Thank you, to Chairman Guliyev, and to the OSCE, for the invitation to address this distinguished assembly.

We have been promised a debate about geoeconomics, and so I’m certain a debate is what we will have.

I want to speak with you today about a specific transformation that will reshape the global economy as profoundly as electrification or the internet—and about why the transatlantic relationship will either define this transformation, or be defined by it.

We are living through what I call the “Inference Revolution,” with respect to the development of artificial intelligence. Just as cloud computing became the invisible backbone of the internet and digital life as we know it, inference computing is becoming the substrate of AI services around the world. Every real-time translation, document synthesis, and scientific simulation made by AI systems will depend on access to distributed, reliable computational power operating at a scale we are now only just beginning to comprehend.

The scale of American investment should speak for itself. U.S. technology and AI companies are projected to spend more than $400 billion on data center infrastructure over the next several years. To put that in perspective, U.S. data centers alone are projected to exceed the energy consumption of all of Japan by 2030. Such massive investment will rewire the global economy for the next half-century, impacting every nation and every constituency represented in this assembly.

Europe is not a passenger in this transformation. But Europe’s role is also not what many of you might think.

The AI stack has six critical layers. We should be direct about where Europe stands in each. In terms of critical minerals extraction and processing, Europe produces essentially nothing and depends almost entirely on China. For high-bandwidth memory and advanced chip packaging, Europe has no major champions. For fabrication of logic chips, Europe has manufacturing capability, but only at mature nodes—not at the bleeding-edge, where competition between the United States and China is most intense.

But at the two layers that determine whether AI infrastructure can actually function at scale—energy systems and connectivity—Europe does not just participate in the global AI economy; it is an irreplaceable fixture within it.

In terms of energy: American hyperscalers looking to build gigawatt-scale data centers depend on European engineering for the power distribution networks that make computation possible. These are the turbines, transformers, and switchgear sold by companies like Siemens, ABB, and Schneider Electric.

In terms of connectivity: Companies like Prysmian, Nexans, and NKT account for 65 percent of the global submarine cable market. Every connection between data centers, and every undersea link carrying traffic between continents, depends on European cable manufacturing and installation expertise that cannot be quickly replicated elsewhere.

This is the essential reckoning of the AI age—one we can choose to embrace, or ignore at our peril: American capital needs European infrastructure. There is no path to AI leadership that runs around Europe. There is only a path that runs through it.

In my view, Europe’s greatest strategic error would be pursuing comprehensive “digital sovereignty”—trying to replicate the entire AI stack domestically. This would be economically unviable and strategically counterproductive. But Europe should pursue “selective sovereignty”—by identifying the two or three layers of the AI stack where it has natural advantages, and making itself absolutely essential within them.

Deepening European dominance in energy infrastructure and connectivity would help rebuild a transatlantic tech partnership with the United States, while providing Europe with disproportionate influence in global technology governance. In this way, Europe may even succeed in reestablishing the “Brussels Effect”—not through regulatory constraint, but by becoming an indispensable partner in building a shared future for AI and digital services.

But there is an uncomfortable reality that this assembly must face:

Europe is treating its selective advantages in AI as permanent, rather than perishable. Some in this assembly and in national parliaments are pushing to build European alternatives across the entire technology stack—rather than leveraging the advantages you already possess.

Europe has both engineering excellence and manufacturing capacity. What it increasingly lacks is grid infrastructure, regulatory velocity, and speedy deployments to convert these advantages into a sustained position of indispensability.

Two guiding principles can act as lodestars for a path forward:

First, Europe must move faster in the segments of the AI stack the world most depends on. The pace of European decision-making on digital infrastructure has not been appropriately calibrated for the Inference Revolution. Siemens Energy has reported a $160 billion backlog, with some turbine frames sold out for seven years; while transformer lead times now exceed two years. These bottlenecks will not resolve themselves; they will require aggressive expansion in capacity and regulatory reform to prioritize speedy deployment.

Europe should specifically invest in three areas: energy generation capacity, grid-scale storage, and transmission infrastructure. The inference revolution is most essentially about energy. The regions that can deliver reliable, cost-effective power at massive scale will host the computational infrastructure of the future, while those that cannot will find themselves dependent on AI services hosted elsewhere.

Second, Europe must demand reciprocity without sliding toward retaliation. European regulations are credible when they apply equally to all market participants. They lose credibility when they disproportionately target American companies, and when enforcement seems calibrated for revenue extraction rather than toward legitimate social aims.

We should also ask honestly: If regulatory requirements make Europe commercially unviable for American AI platforms, who will fill the vacuum? Is it truly “European alternatives built on European values”—or will it be Chinese platforms, operating under very different rules?

Now let me address the current American political moment directly, because I understand the concerns in this room:

Even amid rising perceptions of American unreliability, turning to China for technology partnership would be a catastrophic mistake. Chinese technology partnerships come with political dependencies that cannot be easily unwound. We have seen this playbook before in telecommunications, in ports, and in electric grids. Each time, Beijing entered a market, deployed the might of the state to gain commercial advantage, established vendor lock-in through technical dependencies, and exploited its leverage through political coercion.

Beijing is watching tensions in the transatlantic alliance with great interest, and is looking for opportunities to displace both American and European suppliers.

The correct response to American unreliability is not geopolitical diversification. The correct response is European acceleration. Europe’s position in the global tech landscape is stronger than the prevailing narrative suggests. You have the engineering capability, and you have the manufacturing capacity. What Europe needs is the operational environment that allows its structural advantages in energy and connectivity to translate into market dominance.

Let me close with this: The next decade will determine whether the transatlantic partnership remains the organizing principle of the democratic world or becomes a historical artifact.

Technology is not peripheral to that question—it is the question.

The choices we make now about energy infrastructure, grid capacity, regulatory frameworks, and investment priorities will reverberate for generations.

Together, we can build a future where European capabilities and American capital create shared prosperity and shared security.

Or we can build a future where Chinese overcapacity fragments the democratic world into competing digital spheres.

I ask this esteemed assembly:

Which way will Europe go?

On January 12, 1950, U.S. Secretary of State Dean Acheson delivered what he intended as a routine address to the National Press Club outlining American policy in Asia. He described a “defensive perimeter” running from the Aleutians through Japan and the Ryukyus to the Philippines — and in so doing, neglected to name South Korea as a core American protectorate.

Five months later, North Korean tanks crossed the 38th parallel. Whether Acheson’s omission actually encouraged Kim Il-sung’s aggression remains the subject of historical debate — Soviet archives opened after 1991 suggest the decision for war was already in motion. But the perception mattered: Ambiguity about American interests in Asia was interpreted in Pyongyang and Moscow as permission to act. When it turned out that American interests in Korea were far more vital than American rhetoric had conveyed, the result was a three-year war that killed nearly 37,000 Americans and drew China into direct military confrontation with the United States.

Seventy-five years have passed, and Beijing again risks misreading apparent American restraint as permission to press the envelope.

Trump is offering China something no prior administration would consider: a “decent peace” that makes space for its rising power.

Will Beijing understand and accept the limits of the deal on offer — or will it squander a generational opportunity through overreach?

The Rise of the Restrainers

There can be little doubt the “Restrainers” are winning a 30-year struggle to seize the reins of Republican foreign policy, shaping American conduct in irreversible ways that are uncomfortable for many in Washington to accept.

Their ascent has been most evident in the conduct of America’s China policy. In the months following President Trump’s tactical détente with Xi Jinping in Busan, his administration has struck a deal to keep TikTok under ByteDance’s effective control, turned a blind eye to PRC military pressure against Japan and Taiwan, reduced Chinese tariffs such that they are barely higher than those on some American allies, reversed export controls on advanced AI chips, eliminated offices focused on technology competition and foreign malign influence, and dissuaded Congress from taking more strident action to countenance China’s transgressions.

Trump has personally promoted the frame of a U.S.-China “G2,” preferring to focus on accumulating American power by picking more limited, winnable fights. The United States is today offering China what amounts to a radical departure from the logic of great-power competition that animated American policy for the better part of a decade: A decent peace in Asia, and a mutually beneficial economic relationship that accommodates rising Chinese power.

Many Republicans — who have long taken pride in defending against Chinese predation — are struggling to accept this reality. Some maintain that this transactional dealmaking might actually constitute a continuation or even elevation of U.S. strategic pressure against Beijing in specific theaters, which had for so long been an essential component of the party’s identity.

But for their part, Chinese officials see this for what it is: a titanic change in U.S. policy. Many express relief that Washington has finally arrived at an “accurate perception” of Chinese power, while others suggest that “MAGA and China need not be enemies.” Some interlocutors today feel so confident in their position that, in the pages of Foreign Affairs, they now pitch a “grand bargain” with the United States.

To be sure, there has been a massive update in U.S. perceptions of Chinese power: For the first time, most Americans today consider China to be even more powerful than the United States. The danger is that all this confidence risks strangling the very future Beijing had worked so desperately to engineer. Across multiple domains, in multiple theaters, China is testing the United States. Since December, it has brazenly hacked the phones of Congressional staff, launched record-setting live-fire military exercises around Taiwan, and slow-walked agricultural purchases and rare earth licenses — perhaps assuming the United States lacks the capacity or political will to push back.

The fragile U.S.-China détente put forward by the Trump administration deserves serious consideration — but whether it lasts will hinge on what China does next. The Busan hangover is already setting in. Any overreach now is sure to drag both countries back into catastrophic confrontation.

Two Things Beijing Should Understand

Chinese strategists should understand two uncomfortable truths about the “deal” on the table:

First, what some analysts have labeled American “retreat” is better understood as American optionality. Analysts who read retrenchment into the current posture are mistaking tactical irreverence for strategic withdrawal. The reality is that Washington is pressing hard-line negotiations with allies and adversaries alike, not abandoning the field. The 2026 National Defense Strategy clarifies that the U.S. conception of a “balance of power” will not accept Chinese primacy in Asia, nor will it cede a “sphere of influence” to any other hegemon. The document plainly states that America’s goal “is not to dominate China; nor is it to strangle or humiliate them.” Instead, it offers Beijing what Secretary Hegseth’s transmittal letter calls “a decent peace” — one “on terms favorable to Americans but that China can also accept and live under.” Yet even as it extends this olive branch, the NDS commits to maintaining “a strong denial defense along the First Island Chain” — one which will surely include continued military exercises with allies, weapons sales to Taiwan, and “the ability to conduct devastating strikes and operations against targets anywhere in the world.”

What Beijing perceives as American weakness, Washington is perceiving as mere negotiating posture. However misguided, the United States does actually believe it can simultaneously demand unprecedented burden-sharing from Tokyo and Seoul, technology transfer from Taipei, and mineral rights in Greenland — while still retaining the fundamental architecture of U.S.-led security in the Indo-Pacific. At Davos, Secretary Bessent delivered an earnest message: “America first does not mean America alone.” The administration’s routine statements of concern about PRC provocations are not hollow. Even as it presses allies to share more in the burden of their own defense, the United States has continued pre-positioning matériel and building infrastructure to balance against PRC dominance in Asia. The President may cultivate a productive relationship with Xi Jinping, but his administration’s fundamental assessment of China — as a rival to be checked, not a hegemon to be accommodated — has not changed.

Second, the promise of a “decent peace” is conditional, and American red lines have not moved. The NDS conclusion contains language Beijing should read carefully: “If our potential opponents are unwise enough to reject our peaceful overtures and choose conflict instead, America’s armed forces will stand ready to fight and win the nation’s wars.” This is not the language of a power in retreat, but the language of a superpower offering terms of coexistence — and warning of dire consequences if those terms are refused.

The United States retains extraordinary economic interests in Asia and considers China its primary rival within that theater. While Washington under Trump has signaled it will not attempt to collapse China’s economy, threaten the leadership of the CCP, or contain its technological rise, U.S. officials remain adamant they will contest Beijing for influence and market share in strategic industries across Southeast Asia, South Asia, Africa, and Latin America. The U.S. technological and economic relationship with Taiwan — however awkwardly each side may frame it — remains a core American interest that cannot be displaced even through productive head-of-state diplomacy.

Moreover, a single throughline still underpins American conduct toward China, fractious as it might appear: deep-seated and largely immutable grievances with China’s economic practices, including massive industrial subsidies, rampant intellectual property theft, and non-tariff barriers to trade. These grievances are shared by most Americans, members of both political parties, the President, traditional hawks, and ascendant economic nationalists within his administration. As the world witnessed in October, attempting to weaponize economic interdependence with the United States is the surest way to erode whatever goodwill both countries may have generated through shrewd diplomatic engagement.

The Future is Unwritten

China today holds tremendous sway over how the next several decades of the U.S.-China relationship will unfold. Accepting a “decent peace” could succeed in architecting something akin to the “new model of great-power relations” Beijing has long sought, while mistakenly exploiting American restraint will surely trigger a slide toward the very containment strategy it worked so hard to dismantle.

Scenario One: The GOP Fractures, Then Overcorrects

The current Republican alignment backing transactional diplomacy with China is more fragile than it appears. While the Restrainers are ascendant, they do not command uniform loyalty — and the institutional incentives that once drove the United States’ hawkish approach to China are once again gaining traction. Several members of Congress have already begun reclaiming authority to oversee aspects of alliance management, war powers, and licenses for AI chip exports. Close observers should have taken note of the Taiwan Assurance Implementation Act, which asserted oversight over U.S.-Taiwan contact guidance; while Congressional committees are reviewing executive agreements and mandating further arms sales to Taiwan.

If Beijing continues exploiting American goodwill and testing the terms of the Busan agreement, the political correction could be severe as key voices in both parties expose the costs of what they perceive to be unacceptable accommodation of Chinese adventurism. A Republican Party that feels it has been played by Beijing — or that faces electoral pressure from its hawkish base — could lurch violently toward containment to make up for lost time; while Democrats continuously hunt for opportunities to out-hawk the administration.

Scenario Two: Trump Feels Betrayed and Changes Course

Within the administration, willingness to negotiate is high but wholly contingent on China’s behavior. The President’s political position is fragile; his approval ratings have wavered; and his coalition is fractious. Trump has shown he is willing to suspend high-level diplomacy when he feels cheated — as when he threatened to cancel his planned summit with Xi Jinping following October’s sweeping rare earth licensing regime. It should be obvious that the President’s willingness to negotiate depends on sustaining genuine and visible wins for the American people.

But this is an unstable equilibrium. The President faces pressure to demonstrate the wisdom of his diplomacy with an adversary much of his base instinctively distrusts.

Every administration that has sought to cooperate with Beijing has faced that bizarre-but-familiar confluence of pressures: an incentive to claim success even when there is little to show for it, and an inability to acknowledge when Beijing is cheating. Under these ordinary circumstances, China can typically get away with just going through the motions or even defecting from the letter of a bilateral agreement with the United States. But pressing that luck now could prove fatal to the entire project. If the President falls into real political trouble — if the economy sours, if scandals multiply, if his coalition fragments — the temptation to blame China for American economic ailments will be overwhelming. A sudden snap-back of tariffs and export controls could materialize almost immediately. Beijing should not assume the current American posture is stable. The reality is that the current space for negotiation is fragile enough that even the appearance of China’s non-compliance could easily shatter it.

Scenario Three: A “Mutually Beneficial Economic Relationship” Takes Shape

The best-case scenario for China requires that Beijing demonstrate its own form of restraint. Perhaps managed diplomacy will succeed in producing modest success for both sides. The President can point to wins that benefit American workers and farmers — curbing fentanyl precursors to materially save American lives, guaranteeing access to rare earth minerals, and sustaining purchases of agricultural products on schedule; while China can find reprieve in a stabilized trade relationship and space for technological progress.

In this scenario, waning public appetite for U.S.-China confrontation might allow a modus vivendi to emerge that — while satisfying neither side’s maximalist preferences — allows both to focus on domestic priorities. A decent peace and mutually beneficial economic relationship could facilitate China’s continued rise without triggering a confrontation between superpowers. But this scenario requires discipline. It requires that Beijing resist the temptation to pocket American concessions and then press for more, understanding that the current negotiating space is fragile — and that defaulting to exploit American restraint will ultimately destroy it.

Which scenario we are headed toward will depend heavily on China’s actions over the next few years, and particularly right now, in 2026.

If Beijing doesn’t push its luck — if it avoids a cross-Strait imbroglio that could kill hundreds of thousands of people, upholds its end of the agreement struck in Busan, and commits seriously to developing a mutually beneficial economic relationship with the United States — then it may very well meet an American public less allergic to economic and technological integration, and give rise to a class of American elites willing to treat it as an equal.

But if Beijing interprets the current moment as license to consolidate its gains — through military pressure on Taiwan, gray-zone operations against the Philippines, economic coercion of American allies, or a strategy of global technological displacement — then it is sure to trigger exactly the backlash it seeks to avoid.

The Temptations of Triumph

The moment we find ourselves in rhymes uncomfortably with two episodes from the long 20th century: the misreading of Acheson’s restraint that spilled American and Chinese blood along the Yalu, and the wages of hubris from America’s own unipolar moment.

After 1991, the United States believed history had ended. It believed its power was unchallengeable and its values universal. It expanded NATO without serious consideration of Russian perceptions, launched campaigns to remake nations in its image, and assumed that economic integration with China could change its political system. It treated its hegemony as permanent, rather than contingent. The result was to breathe life into the very challengers American primacy was supposed to preempt.

China now faces its own version of this temptation. Its economy has grown faster than anyone predicted. Its military has modernized beyond recognition. Its technological capabilities have advanced at breakneck speed. And it now confronts an American administration that appears — for the first time in decades — willing to accept something other than Chinese subordination.

The temptation to press this advantage — to consolidate gains while Washington appears distracted or complaisant — must be overwhelming. It is precisely this mistake that goaded the United States into squandering its own moment of triumph. And it is precisely this mistake that could transform a manageable, even mutually beneficial competition into unmanageable catastrophe.

The arc of a stable U.S.-China relationship is Beijing’s to lose.

Will it find the grace to accept a decent peace?

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美国的克制及其底线

北京会接受一份体面的和平吗？

1950年1月12日，美国国务卿迪安·艾奇逊在全国新闻俱乐部发表了一场他本意只是例行公事的讲话，概述美国在亚洲的政策。他描述了一条“防御周界”，从阿留申群岛经日本和琉球群岛延伸至菲律宾——而在这一表述中，他疏忽了将韩国点名为美国核心的保护对象。

五个月后，朝鲜坦克越过了三八线。艾奇逊的遗漏是否真的鼓励了金日成的侵略，至今仍是历史争论的主题——1991年后开放的苏联档案表明，发动战争的决定可能早已在推进之中。但“认知”本身就足够重要：对美国在亚洲利益的暧昧，被平壤与莫斯科解读为可以动手的许可。当事实证明，美国在朝鲜的利益远比美国言辞所传达的更为攸关时，结果便是一场持续三年的战争，造成近3.7万名美国人死亡，并把中国拖入与美国的直接军事对抗。

七十五年过去了，华盛顿再次释放出混杂信号——而北京也再次面临着将美国表面上的克制误解为可以进一步试探底线的风险。

特朗普正在向中国提供任何一届前任政府都未曾考虑的东西：一份为中国的崛起腾出空间的“体面和平”。

北京是会理解并接受这份摆在桌面上的协议的限度，还是会因过度扩张而浪费掉一代人的机遇？

一、 “克制派”的崛起

几乎可以肯定，“克制派”正在赢得一场长达三十年的斗争，意在夺取共和党外交政策的缰绳，并以华盛顿许多人不愿接受的方式，深刻而不可逆地塑造美国的行为。

他们的上升在美国对华政策的操作中最为明显。特朗普总统在釜山与习近平达成战术性缓和后的几个月里，其政府达成协议，使TikTok在事实上仍处于字节跳动的有效控制之下；对中国对日本与台湾施加的军事压力视若无睹；下调对华关税，使其几乎仅比对某些美国盟友的关税略高；逆转对先进人工智能芯片的出口管制；撤销聚焦技术竞争与外国恶意影响的办公室；并劝阻国会采取更强硬的行动，以追究中国的越界行为。

特朗普本人也在推动“美中G2”的叙事框架，更倾向于通过挑选更有限、可取胜的战斗来积累美国力量。今天，美国正向中国提供一种几乎等同于对过去十年支撑美国政策的“大国竞争逻辑”的激进背离：在亚洲达成一份体面和平，以及一种能够容纳中国崛起的、互利的经济关系。

许多共和党人——长期以来以抵御中国掠夺为荣——正艰难地接受这一现实。有些人仍坚持认为，这种交易式的斡旋也许实际上构成了对北京在特定战区的战略施压的延续，甚至是升级；而这种施压长期以来一直是该党身份认同的重要组成部分。

但在中国官员看来，这就是它本来的样子：美国政策的一次巨变。许多人对华盛顿终于形成对中国力量的“准确认知”表示如释重负；另一些人则暗示“让美国再次伟大”和中国未必必须成为敌人”。如今有些对话者自信到一种程度，甚至在《外交事务》的版面上向美国推销一项“宏大交易”。

的确，美国对中国力量的认知发生了巨大更新：这是第一次，今天大多数美国人认为中国甚至比美国更强大。危险在于，这种自信有可能扼杀北京曾不惜代价谋划的未来。在多个领域、多个战区，中国正在测试美国。自12月以来，它公然入侵国会工作人员的手机；在台湾周边发动规模空前的实弹演习；并拖延农产品采购与稀土许可——或许是认为美国缺乏能力或政治意愿进行反制。

特朗普政府提出的脆弱“美中缓和”值得严肃对待——但它能否持续，将取决于中国下一步的行动。釜山之后的“宿醉感”已经开始显现。此刻任何越界之举，都必然把两国拖回灾难性的对抗之中。

二、 北京应当明白的两件事

中国战略家应当明白，摆在桌面上的这份“交易”包含两条令人不适的真相：

第一，一些分析人士所称的美国“撤退”，更准确地应被理解为美国在保留选择权。把当下姿态解读为收缩的人，是把战术上的不按常理出牌误当作战略性的退出。现实是，华盛顿正在对盟友与对手一视同仁地推进强硬谈判，而非放弃战场。2026年《国家防务战略》明确指出，美国对“力量均衡”的构想不会接受中国在亚洲的主导地位，也不会把“势力范围”让给任何其他霸权。文件直言不讳地写道，美国的目标“不是要支配中国；也不是要扼杀或羞辱中国”。相反，它向北京提供了国防部长赫格塞思转呈信中所称的“一份体面和平”——“条件对美国有利，但中国也可以接受并在其下生活”。然而，即便在递出橄榄枝的同时，《国家防务战略》仍承诺维持“沿第一岛链的强大拒止防御”——其中必然包括继续与盟友军演、对台军售，以及“在全球任何地点对目标实施毁灭性打击与行动的能力”。

北京所感知的美国软弱，在华盛顿看来只是谈判姿态。无论这种想法多么误判，美国确实相信它可以同时向东京与首尔要求前所未有的负担分担，向台北索取技术转移，向格陵兰攫取矿产权益——同时仍维持由美国主导的印太安全基本架构。在达沃斯，财政部长贝森特传递了一条真诚的信息：“美国优先不等于美国孤立。”政府对中国挑衅的例行关切并非空洞。即便它敦促盟友为自身防务承担更多负担，美国仍在继续预置军需物资并建设基础设施，以制衡中国在亚洲的主导。总统或许会经营与习近平的富有成效的关系，但其政府对中国的基本评估——把中国视作需要制衡的对手，而非需要迁就的霸权——并未改变。

第二，“体面和平”的承诺是有条件的，而美国的红线并未移动。《国家防务战略》结语中的措辞，北京应当仔细阅读：“如果我们的潜在对手愚蠢到拒绝我们的和平提议而选择冲突，美国武装力量将随时准备作战并赢得国家的战争。”这不是一个正在撤退的大国的语言，而是一个超级大国提出共存条件——并警告若拒绝这些条件将承担严重后果——的语言。

美国在亚洲仍拥有非同寻常的经济利益，并将中国视为该战区内的首要竞争对手。尽管特朗普治下的华盛顿已释放信号，表示不会试图摧毁中国经济、威胁中共领导层，或遏制其技术崛起，但美国官员仍坚称，将在东南亚、南亚、非洲与拉丁美洲的战略产业中与北京争夺影响力与市场份额。美国与台湾之间的技术与经济关系——无论双方如何尴尬地表述——仍是美国核心利益之一，即便通过富有成效的元首外交也无法被置换。

此外，美国对华行为仍有一条贯穿始终的主线，尽管表面看起来纷乱：对中国经济做法的深层且在很大程度上不可改变的不满，包括巨额产业补贴、猖獗的知识产权盗窃，以及非关税贸易壁垒。这些不满为大多数美国人、两党人士、总统本人、传统鹰派以及其政府内部崛起的经济民族主义者所共享。正如世界在10月所见，试图将与美国的经济相互依赖武器化，是侵蚀两国通过精明外交互动所可能积累的任何善意的最可靠方式。

三、 未来尚未写定

中国今天在很大程度上掌握着未来几十年美中关系将如何展开的主导权。接受“一份体面和平”，或许能成功塑造某种类似北京长期追求的“新型大国关系”；而误用美国的克制、把它当作可被利用的弱点，则必然触发滑向北京曾竭力拆解的那套遏制战略。

情景一：共和党分裂，随后过度纠偏

当前共和党内部支持对华交易式外交的结盟，比看起来更为脆弱。尽管克制派正在上升，但他们并未获得一致忠诚——而曾推动美国对华强硬路线的制度性激励，正再次积聚势能。国会已有数名成员开始重新夺回对联盟管理、战争权力以及人工智能芯片出口许可等方面的监督权。密切观察者本应注意到《台湾保证实施法案》，该法案主张对美台接触指引进行监督；与此同时，国会委员会正在审查行政协议，并要求进一步对台军售。

如果北京继续利用美国善意、不断测试釜山协议条款，那么当两党关键人物揭示他们所认为的对中国冒进的不可接受迁就之成本时，政治纠偏可能会非常剧烈。一个自觉“被北京耍了”的共和党——或在其鹰派基本盘的选举压力下——可能会为弥补“失去的时间”而猛然转向遏制；而民主党则会不断寻找机会在对华强硬上超越本届政府。

情景二：特朗普感到被背叛并改变路线

在政府内部，谈判意愿很高，但完全取决于中国的行为。总统的政治地位并不稳固；其支持率起伏不定；其联盟内部矛盾丛生。特朗普已经表明，当他觉得被欺骗时，他愿意暂停高层外交——例如在10月中国推出广泛的稀土许可制度后，他曾威胁取消与习近平的计划峰会。显而易见，总统愿意谈判的前提，是必须持续为美国人民带来真实且可见的胜利。

但这是一种不稳定的均衡。总统面临压力，需要证明与一个其基本盘本能不信任的对手进行外交的“英明”。

每一个试图与北京合作的美国政府都遭遇过那种怪异却熟悉的压力交汇：即便几乎没有成果，也有激励去宣称成功；同时又缺乏在北京作弊时坦承现实的能力。在这种常见情境下，中国通常可以通过走过场，甚至背离美中双边协议的字面要求而不受惩罚。但在当下继续“赌运气”，可能会对整个项目造成致命打击。如果总统陷入真实的政治困境——如果经济转坏、丑闻增多、联盟破裂——把美国经济问题归咎于中国的诱惑将压倒一切。关税与出口管制的突然回弹几乎可能立即发生。北京不应假设当前美国姿态稳定。现实是，当下谈判空间极其脆弱，甚至只要出现“中国不履约”的认知，就足以将其击碎。

情景三：“互利的经济关系”成形

对中国而言的最佳情景，要求北京展现自身的克制。或许经管式外交能够为双方带来有限但真实的成功。总统可以指向有利于美国工人与农民的胜利——实质性遏制芬太尼前体以挽救美国生命，确保稀土矿产供应，以及按计划维持农产品采购；而中国则可以在稳定的贸易关系中获得喘息空间，并争取技术进步的余地。

在这一情景下，美国公众对美中对抗的兴趣下降，可能让一种“权宜共处”逐步出现：尽管无法满足双方的最大化偏好，却能让两国把重心转向国内优先事项。一份体面的和平与互利的经济关系，或许能使中国继续崛起而不触发超级大国之间的对抗。但这一情景需要纪律——需要北京抵制把美国让步“收入囊中”后再继续加码的诱惑，理解当下谈判空间脆弱，并认识到默认通过利用美国克制来获利，最终只会摧毁这种空间。

我们将走向哪一种情景，很大程度上取决于中国未来几年、尤其是当下2026年的行动。

如果北京不去试运气——如果它避免在两岸引爆可能造成数十万人死亡的危机；履行在釜山达成的协议；并认真致力于与美国发展互利的经济关系——那么它很可能会遇到一个对经济与技术整合不那么过敏的美国公众，并促成一批愿意把中国当作平等者对待的美国精英阶层。

但如果北京把当前时刻解读为巩固既得成果的许可证——通过对台军事施压、对菲律宾的灰色地带行动、对美国盟友的经济胁迫，或推行一种全球技术替代战略——那么它必然会触发其最想避免的反弹。

四、胜利的诱惑

我们所处的时刻，与漫长的20世纪中两段历史形成令人不安的押韵：一段是对艾奇逊克制的误读，在鸭绿江边溢出美中鲜血；另一段则是美国自身单极时刻的傲慢代价。

1991年之后，美国相信历史已经终结。它相信自己的力量不可挑战，价值具有普遍性。它在未认真考虑俄罗斯认知的情况下扩张北约，发动按自身形象改造他国的战争，并假设与中国的经济融合能够改变其政治制度。它把自身霸权当作永久存在，而非取决于条件的结果。最终，这些做法反而为那些本应被美国优势所“预先阻止”的挑战者注入了生命力。

中国如今也面临自己的版本的诱惑。它的经济增长超出所有人的预测。它的军队已现代化到面目全非。它的技术能力以惊人的速度推进。并且它如今面对一个看起来——数十年来第一次——愿意接受某种并非“让中国屈从”的美国政府。

在华盛顿显得分心或顺从之时，趁势压上、巩固既得成果的诱惑必定巨大。正是这种错误曾诱使美国挥霍自身胜利时刻。也正是这种错误，可能把一场可控、甚至互利的竞争，变成不可控的灾难。

一段稳定的美中关系之弧线，最终取决于北京是否将其亲手葬送。

北京是否能有那份风度，接受一份体面的和平？

China’s military exercises around Taiwan are beginning to resemble the Fast & Furious movie franchise: Each installment carries a flashy title card and promo poster, with progressively bigger stunts and the same predictable plotline.

Beijing’s announcement on Monday that it would conduct live-fire drills across five maritime zones encircling Taiwan marks the sixth major round of PLA war games since 2022. This time, the PLA and CCG deployed 130 aircraft and 28 ships within a 24-hour period to conduct simulated blockades, testing what Beijing calls “all-dimensional deterrence outside the island chain.”

The timing and political message behind “Justice Mission-2025” were carefully calibrated. Beijing sought to needle the United States in retaliation for its December 17 arms sale, while ensuring a minimal U.S. response. To do so, it launched the exercise during a period when Washington is both distracted (during the holidays, and while the administration is squarely focused on ending the war in Ukraine) and committed to keeping the U.S.-China relationship relatively stable (ahead of Trump’s state visit to China in April). Now, propagandists are pointing to the relatively muted U.S. response as evidence of America’s lack of resolve and declining power.

We have seen this movie before. And if box office records are any indication, we’ll keep seeing it in 2026 and 2027. It’s long past time for Washington to develop a policy playbook to reestablish deterrence in the Taiwan Strait.

The Dual Purpose of China’s Military Exercises

Crafting an appropriate response to PLA exercises demands that we understand their purpose.

On the one hand, Beijing has strategic goals that have remained consistent for years — which it will not abandon, and uses military exercises to advance. These are three-fold: improving operational readiness to employ force against Taiwan, deterring foreign intervention in the event that force is deployed, and eroding Taiwan’s will to resist force applied against it.

1. Improve operational readiness by rehearsing for a genuine use of force. The Pentagon’s 2025 China Military Power Report documents the PLA’s steady progress toward its 2027 modernization goals. Each exercise validates essential components of multiple military options, including blockades, strikes against high-value targets, and the integration of Coast Guard vessels into military operations. The Eastern Theater Command clarified its most recent drills are designed to simulate a “blockade on key ports and areas,” which would deny intervention by any foreign military in the event the PLA were to employ force against Taiwan. As Admiral Samuel Paparo testified in April: “Beijing’s aggressive maneuvers around Taiwan are not just exercises — they are dress rehearsals for forced unification.”

2. Sap the political will for foreign intervention by normalizing PLA activity in the Strait. The PLA’s near-weekly joint combat patrols are designed to recalibrate what is considered “normal” activity in the Taiwan Strait. Each major, named exercise conditions both Taiwan’s public and the international community to accept intensified military activity as the new baseline. Whereas five years ago there existed a soft taboo against any PLA aircraft crossing the imagined “center-line” of the Taiwan Strait, this is today a daily occurrence. The PLA is now attempting to normalize the launch of live missiles into Taiwan’s claimed 24-nautical mile contiguous zone.

3. Erode Taiwan’s will to resist by presenting unification as inevitable. The exercises serve a psychological warfare function designed to convince Taiwan that resistance is futile and create domestic political space for accommodation with Beijing. It is no small wonder Beijing chose to time its most recent exercise to coincide with Taiwan’s legislative debate to fund a special defense budget, and on the eve of the Taipei-Shanghai Twin City Forum promoting unification.

No amount of tactical maneuvering or accommodation will force Beijing to abandon these objectives. A broad U.S. strategy for deterring future military exercises must understand this, and impose costs that make exercises less appealing or counterproductive in achieving these objectives.

On the other hand, Beijing tailors the tactical messaging around each major exercise to serve its immediate political aims — which should be actively contested. The narrative around Justice Mission 2025 served three purposes:

1. Beijing sought to reframe a long-planned exercise as retaliation for a large U.S. arms sale to Taiwan. Chinese Foreign Ministry spokesman Lin Jian framed the drill as “severe punishment for the separatist forces seeking independence” and condemned Washington for “arming Taiwan.” The drill — which came just 11 days after the arms sale announcement — was billed as an inevitable, “justified” countermeasure to U.S. “provocation.” (In reality, the December 17 arms sale was a routine implementation of U.S. policy under the Taiwan Relations Act.)

2. The exercise was timed to provoke a minimal U.S. response. Launching the drills in the midst of the holiday season ensured Washington would struggle to coordinate an immediate reply. More importantly, Beijing understands that Trump is committed to maintaining a “mutually beneficial economic relationship” with China, and so may be hesitant to jeopardize hard-won stability ahead of his state visit in April.

3. Beijing will now point to Washington’s muted response to undermine global confidence in U.S. resolve. This dovetails perfectly with the domestic political messaging of Taiwan’s opposition Kuomintang (KMT): If the United States cannot be relied upon to meaningfully respond to the largest exercises to date, what credibility do American security commitments actually carry? The PRC’s message to Taiwan is that American support is conditional and accommodation with Beijing inevitable.

It’s important to separate Beijing’s strategic goals from its tactical objectives. Again: Beijing would be conducting exercises around Taiwan regardless of U.S. arms sales or political developments. But it selected this particular timing and this particular framing, in part, to sow maximum doubt about U.S. credibility. The Trump administration’s response this week should clarify the fact that Beijing had planned to launch this exercise independent of any U.S. arms sale, that it is part of a long-running effort to normalize threatening behavior in the Taiwan Strait, and that it will play no role in influencing the rock-solid U.S.-Taiwan partnership.

A durable U.S. policy for responding to future PLA military exercises should keep Beijing’s strategic objectives in mind and attempt to deny or match them. This includes being careful with public messaging: Washington should acknowledge when exercises are happening — that they are unusual, dangerous, and destabilizing to commercial shipping — while minimizing amplification of PRC propaganda. Extensive analysis of Chinese promo material or footage captured by PLA aircraft inadvertently serves Beijing’s psychological warfare objectives by spreading the very content designed to project overwhelming force and inevitability.

Gauging Washington’s Reaction

Since 2022, U.S. diplomatic statements, follow-on arms sales, freedom of navigation operations, and reciprocal military drills have not been sufficient to deter the PLA from launching exercises around Taiwan. Several analysts point out that drawing undue attention to the PLA’s activities only risks amplifying its propaganda. This is why it is understandable — and probably the right messaging call — for the President of the United States to downplay the drills’ significance and insist he is “not worried” about them. But the reality is that the U.S. national security establishment is seized with this issue, for good reason:

Politically, each exercise contributes to the deterioration of allied confidence in U.S. security commitments in Asia. In Taiwan, a muted U.S. response to a major PLA exercise lends credence to the KMT’s argument that Washington will ultimately cut ties when the costs grow too high, and saps the Legislative Yuan’s will to fund a sufficient self-defense capability. Beyond the island, U.S. silence tells both Beijing and U.S. allies that, when forced to choose between responding to gray-zone coercion and preserving near-term diplomatic stability, Washington will choose the latter.

Operationally, holding regular live-fire exercises makes it difficult to distinguish between routine activity and preparation for a genuine employment of force. Recent exercises have featured new patterns of behavior that could mask actual preparation for a blockade or island seizure — including by simulating port closures, integrating Coast Guard and commercial vessels into operations, and declaring intent to approach within 24 nautical miles of Taiwan’s coast. As Admiral Paparo warned in February, the increased operational tempo and intensity have brought INDOPACOM “very close to that point where on a daily basis the fig leaf of an exercise could very well hide operational warning.”

How the United States Should Respond

If it wants to deter the PLA from undertaking progressively more sophisticated exercises around Taiwan, the United States must craft policies that impose real costs on Beijing without triggering an immediate crisis. Doing so will require moving beyond the standard grab-bag of ad hoc reciprocal drills, Taiwan Strait Transits, and statements of condemnation — and toward durable principles and forward-looking mechanisms to deter gray-zone coercion.

1. Reclaim the Initiative in High-Level Diplomacy with China

Beijing currently controls the tempo of escalation in the Taiwan Strait. The PLA decides when to launch exercises and how long they last. Washington’s standard-fare objections have become so predictable that Beijing has already priced them in.

The U.S.-China tactical détente engineered by President Trump has created space to invert this dynamic. Both sides have an interest in developing a more stable and predictable bilateral relationship. The administration can make clear that China’s military exercises around Taiwan directly undermine this shared objective:

A. Publicly, senior officials should indicate that sustained, productive U.S.-China diplomacy will depend on Beijing demonstrating restraint in the Taiwan Strait. This need not be inflammatory; the message can be delivered through backgrounders with appropriate outlets and comments by senior officials: “The President looks forward to productive discussions with President Xi. To ensure the best environment for that engagement, both sides should avoid actions that increase tensions in the Taiwan Strait and undermine the basis for stability in the relationship.”

The key is linking Beijing’s behavior to summit conditions, without issuing an ultimatum that destroys the political space for de-escalation. In October, when Beijing surprised the world with a sweeping rare earth licensing regime, Trump at first threatened to cancel his planned meeting with Xi Jinping in Busan, prompting an immediate walk-back. If PLA exercises continue or intensify ahead of Trump’s state visit in April, the administration should understand that the optics will not be good for the President — and the United States should be prepared to reschedule until conditions are suitable for a meeting: “President Trump does not negotiate under the shadow of a blockade.”

B. Privately, the Trump administration should demand that Beijing adhere to specific red lines. These could include:

• No quarantine or interdiction of Taiwan-bound commercial traffic

• No boarding or inspection of vessels in international waters

• No live-fire exercises that endanger international air or sea routes

These are not naïve requests for Beijing to abandon its political objectives regarding Taiwan — they are boundaries China should have an interest in respecting, because violating them would risk internationalizing an issue Beijing prefers to frame as “internal.” The administration should communicate these red lines through appropriate diplomatic channels and make clear that crossing them would trigger immediate consequences.

2. Develop an Economic “Slipknot” That Tightens as Beijing Escalates

The United States needs a flexible, dynamic, time-bound policy tool that punishes Beijing for its transgressions — something damaging enough to change China’s calculus to conduct a given exercise, while keeping U.S. powder dry for a true emergency. The model should be a self-ratcheting instrument that tightens as Beijing lashes out, not a whack-a-mole mallet that Beijing can paint as disproportionate or escalatory.

To be credible, such a policy lever would need to be “automatic” — tied directly to the duration of Chinese military activity, extremely damaging, and within the power of the Executive Branch to start or stop at a moment’s notice. Several candidate authorities are listed below. This is meant as an illustrative exercise — any of these measures would carry significant costs for the United States, and Washington should not take them lightly. But each is severe enough that it may reasonably prompt Beijing to rethink a given exercise:

A. Suspension of flights. The no-fly zones imposed during Justice Mission 2025 disrupted travel plans for 100,000 passengers across nearly 900 commercial flights. The United States could likewise prevent Chinese carriers from overflying or landing in the United States for the duration of a given military exercise. Article 4 of the U.S.-PRC Civil Air Transport Agreement permits each party to “revoke, suspend, or … impose such conditions as it may deem necessary on the appropriate authorizations granted to a designated airline of the other Party” following consultation with the other.

B. Suspension of port calls. Depending on whether or how it is enforced, an attempted maritime interdiction campaign or “simulated blockade” of Kaohsiung and Keelung could hold international shipping at risk, destabilizing countless supply chains and causing freighters to miss their berth windows. In response, the United States could temporarily restrict maritime access by making U.S. port calls prohibitively expensive for Chinese carriers. Indeed, USTR briefly invoked this authority in October when it imposed fees of $50 per net ton, per port call on Chinese-operated vessels. For a carrier like COSCO, which makes thousands of U.S. calls annually, this was effectively a suspension of service rights.

C. Pause on visa processing. For the duration of a given exercise, the United States could temporarily slow or suspend the processing of non-immigrant Chinese visa applications — either through administrative policy changes that redirect or restrict where NIV applications can be adjudicated; or through a temporary suspension of routine visa services at specific diplomatic posts within China. The Trump administration most recently announced such a measure in August during diplomatic negotiations with Zimbabwe.

D. Temporary tariff surcharge. Trump has already demonstrated he is willing to use tariffs as diplomatic leverage, most famously through the 20 percent fentanyl surcharge that brought Beijing to negotiations in Busan. It might not be such a far cry to imagine a similarly structured “Instability Fee” — a temporary, targeted 10-15 percent tariff increase that lasts for the duration of a military exercise, increasing or sunsetting depending on Beijing’s compliance.

Regardless of what form it takes, an economic slipknot — declared in advance, with specific start and end conditions pegged to truly destabilizing PLA activity — would demonstrate resolve without risking drastic escalation. It would bolster deterrence by imposing a predictable cost for Beijing, and give the administration a tool that can be calibrated to the severity of a given exercise.

Moreover, adopting such a consistent, “automatic” mode of cost imposition would preserve space for continued U.S.-China diplomacy — by making clear that U.S. pressure is tied to specific Chinese behavior that threatens regional stability, not general opposition to U.S.-China engagement or the wider project of developing a mutually beneficial economic relationship with Beijing.

3. Expedite Arms Sales Commensurate with the Threat Taiwan Faces

Beijing’s decision to cast its military exercises as “punishment” for U.S.-Taiwan defense cooperation cannot stand unchallenged. If China succeeds in establishing a DARVO pattern whereby it lashes out in a military exercise, blames the arms sale for provoking it, and then the world watches Washington hesitate to provide Taiwan with weapons next time, we risk effectively handing China a veto over Taiwan’s self-defense capability.

The administration should proceed with concrete measures that ensure any given PLA exercise backfires by enhancing Taiwan’s readiness more than Beijing’s.

A. First, the United States should design a policy framework whereby PLA exercises trigger expedited provision of existing arms sales to Taiwan. This will require addressing structural bottlenecks in the Foreign Military Sales (FMS) process.

The reasons for the $22 billion backlog in U.S. arms sales to Taiwan are well-documented: Each sale is subject to a review of U.S. production capacity, and added to a queue that prioritizes active-duty U.S. forces over foreign partners. Many obstacles in the FMS process are technically or politically impractical to address — Lockheed Martin cannot manufacture additional Precision Strike Missiles overnight while domestic demand exceeds production capacity. But at least some of Taiwan’s 25 ongoing FMS cases face hurdles that are largely procedural, owing to bundling and de-prioritization in the procurement queue, and could be compressed with senior-level attention and clear guidance.

One option would be to allow the Under Secretary of War for Acquisition & Sustainment, in coordination with DSCA and INDOPACOM, to issue guidance temporarily designating Taiwan as a “priority customer” for select systems following major PLA drills. This could be executed through a Defense Priorities and Allocations System (DPAS) adjustment or internal DSCA directive to move up a certain number of Taiwan’s orders within the existing “DO-rated” industrial queue, effectively slotting them alongside or immediately behind “DX” U.S. Service requirements, rather than at the end of the international line.

The guidance could be time-bound (e.g., boosting new orders placed within 90 days of a PLA exercise) — and applied selectively to cases where production capacity exists but delivery timelines are artificially long; where the sale contributes immediately to cross-Strait deterrence (e.g., Harpoon, Stinger, Javelin, HIMARS); and where Taiwan’s Defense Ministry can demonstrate the ability to immediately receive and operationalize the system.

This mechanism would signal to Beijing that conducting coercive drills will accelerate Taiwan’s readiness rather than intimidate it. And it is fully consistent with the longstanding U.S. one China policy — which assists Taiwan with maintaining a sufficient self-defense capability that is “commensurate with the threat it faces.”

B. Second, if Beijing’s coercion escalates beyond exercises into actual maritime interdiction, the United States should prepare options for transfers of additional munitions to Taiwan using Presidential Drawdown Authority (PDA).

The Trump administration is understandably hesitant to give away precious stockpiles of U.S. munitions when domestic requirements remain unmet and the United States faces crunches in production capacity across multiple munitions categories. But China’s military exercises against Taiwan are a special case — they are expressly designed to place a ceiling on U.S.-Taiwan coordination and erode global trust in American resolve. This is precisely the scenario that Presidential Drawdown Authority was created to address.

The goal should be to lean on PDA to deter destabilizing Chinese behavior, not necessarily facilitate the immediate drawdown of U.S. stockpiles. The Trump administration should develop packages, obtain necessary approvals, and communicate through appropriate channels that these options exist and will be invoked if Beijing crosses established red lines.

A coherent, consistent U.S. posture could invoke an economic slipknot in response to a major PLA exercise, with the promise of immediate defensive arms transfers from U.S. stocks if the exercise escalates into actual interdiction or poses a threat to international commerce.

Deterrence That Advances Diplomacy

The President’s April summit will be more productive if Beijing understands that coercion carries costs. The policy tools outlined here are designed to impose that cost in a way that is predictable, reversible, and advances the longstanding U.S. objective of maintaining peace and stability in the Taiwan Strait.

This framework also leaves room for the mutually beneficial bilateral relationship both Washington and Beijing claim to want. It does not pretend that China will abandon its political objective of unification, nor does it require taking a position on Taiwan’s ultimate political status. It simply makes clear that productive U.S.-China relations require mutual restraint in the Taiwan Strait — and that restraint will be rewarded while coercion will not.

A successful U.S. strategy for managing PLA exercises will not eliminate them as a feature of Chinese foreign policy — they are too essential to Beijing’s defense modernization for this to be a realistic U.S. objective. Rather, the goal should be to narrow the scope of what Beijing believes it can do without consequence, deter activities that hold international commerce at risk, and ensure that each drill strengthens rather than erodes Taiwan’s capability and willingness to defend itself.

The alternative is to wait until a simulated blockade becomes reality, and for all parties to discover what red lines exist only after they’ve been crossed.

At long last, the Trump administration has offered an answer to the question: What kind of relationship does the United States want with China?

A mutually advantageous economic relationship with Beijing.

But what precisely does this entail?

The new National Security Strategy is what all strategies are — a consensus document produced through least-common-denominator bargaining between its authors. But rather than picking winners from the divergent worldviews of the economic nationalists, hard-power competitors, and transactional restrainers within his administration, President Trump’s 2025 NSS appears to be a strange and at times contradictory amalgam.

The result offers some clues as to the trajectory of American power — and makes clear that the war for America’s China policy is far from over.

The Document as Battlefield

In an ideal world, the National Security Strategy exists to impose order on the interagency by answering fundamental questions about what America wants, how much it will pay to achieve it, and which tools it will deploy toward those ends.

The 2025 NSS instead reads like a ceasefire agreement between warring camps — each faction securing its preferred language in different sections, without an overarching framework to reconcile the contradictions.

On economics, for example, the NSS promises to “rebalance America’s economic relationship with China, prioritizing reciprocity and fairness to restore American economic independence” — clarifying two paragraphs later that “Trade with China should be balanced and focused on non-sensitive factors.” This could mean almost anything. Then an articulation of the ultimate U.S. objective:

“If America remains on a growth path — and can sustain that while maintaining a genuinely mutually advantageous economic relationship with Beijing — we should be headed from our present $30 trillion economy in 2025 to $40 trillion in the 2030s. Our ultimate goal is to lay the foundation for long-term economic vitality.”

Read that again. The NSS envisions growing the U.S. economy by a third over the next decade while also “restoring American economic independence” from the same Chinese manufacturing base that currently produces components essential to that growth. The administration’s theory of victory involves maintaining a “mutually advantageous” relationship with the country it elsewhere describes as America’s primary strategic competitor.

This is not a unified declaration of American intent, but three separate strategies crammed into adjacent paragraphs.

Economic Nationalism Ascendant

The clearest factional victories belong to the economic nationalists. The document’s middle sections are characterized by their worldview — that economic security is national security, and that dependence on foreign supply chains constitutes a “civilizational vulnerability.”

The NSS commits to “reindustrialization” through “the strategic use of tariffs and new technologies that favor widespread industrial production in every corner of our nation, raise living standards for American workers, and ensure that our country is never again reliant on any adversary, present or potential, for critical products or components.” Here is the calling card of Mr. Navarro — tariffs as permanent policy rather than negotiating leverage. The goal is not to extract concessions from Beijing but to restructure American production away from Chinese supply chains.

A similar pattern characterizes descriptions of the defense industrial base. “America requires a national mobilization to innovate powerful defenses at low cost, to produce the most capable and modern systems and munitions at scale, and to re-shore our defense industrial supply chains.” This is not about increasing U.S. military or technological power in relative terms, but rebuilding American manufacturing capacity as a matter of national survival.

The segment on energy is likewise a nod to economic nationalists, advancing the project of industrial revival and exploiting domestic resources: “Restoring American energy dominance (in oil, gas, coal, and nuclear) and reshoring the necessary key energy components is a top strategic priority.” The document categorically rejects “disastrous ‘climate change’ and ‘Net Zero’ ideologies that have so greatly harmed Europe, threaten the United States, and subsidize our adversaries.” The focus is on removing the regulatory constraints that nationalists see as obstacles to American industrial resurgence.

Permanent tariffs, supply chain independence, energy dominance, and rejection of climate constraints are the throughline of the NSS. If this were the entire document, the strategy would at least present a coherent vision of American power.

Superficial Wins for Hard-Power Hawks

The hard-power faction can likewise claim partial victory. The Taiwan section keeps intact a core element of the U.S. catechism on cross-Strait policy — maintaining that “the United States does not support any unilateral change to the status quo in the Taiwan Strait” — but remains suspiciously quiet on China’s widely reported ask that the United States “oppose” rather than “not support” Taiwan independence. The NSS says:

“There is, rightly, much focus on Taiwan, partly because of Taiwan’s dominance of semiconductor production, but mostly because Taiwan provides direct access to the Second Island Chain and splits Northeast and Southeast Asia into two distinct theaters.”

This line is important win for hard-power advocates. It subordinates U.S. economic interests in Taiwan to national security needs: Taiwan matters because it enables the United States to protect and project national power in Asia.

The NSS also pledges to “build a military capable of denying aggression anywhere in the First Island Chain” and “harden and strengthen our military presence in the Western Pacific.” Yet this is undercut by inexplicable hedging in the phrase “deterring a conflict over Taiwan, ideally by preserving military overmatch, is a priority.” Why is this merely “ideal,” and not labeled as an explicit priority? Is the United States open to the prospect of losing military overmatch in the Western Pacific?

The segment on alliances is where the document’s factional compromises become painful to read and particularly chafing for U.S. partners to bear:

“Given President Trump’s insistence on increased burden-sharing from Japan and South Korea, we must urge these countries to increase defense spending, with a focus on the capabilities—including new capabilities—necessary to deter adversaries and protect the First Island Chain. We will also harden and strengthen our military presence in the Western Pacific, while in our dealings with Taiwan and Australia we maintain our determined rhetoric on increased defense spending.”

At the same time hard-power advocates seek allied cooperation and prefer extended U.S. deterrence commitments, transactionalists insist they must pay more.

The same pattern appears on technology competition. The NSS acknowledges the need for “offensive cyber operations” and improved capabilities to “bolster the resilience of the American technology sector.” It commits to “maintaining economic preeminence” and describes advanced technology as essential to deterrence. But it offers no theory for how surgical export controls will work when the NSS simultaneously promises to use American technology as an “inducement” to swing states: “America should similarly enlist our European and Asian allies and partners, including India, to cement and improve our joint positions... by receiving long-term U.S. investment.”

So which is it? Are advanced chips strategic assets to be denied to China, or commercial products to be offered as diplomatic carrots? The NSS does not resolve this tension because the factions cannot agree on the answer.

Restraint as a New Architecture of Great-Power Relations

There can be no doubt that realism and restraint are the intellectual throughline of the 2025 NSS. The document’s opening pages announce: “The days of the United States propping up the entire world order like Atlas are over.” America will practice “burden-sharing and burden-shifting,” with “dozens of wealthy, sophisticated nations that must assume primary responsibility for their regions and contribute far more to our collective defense.”

The Hague Commitment demanding 5 percent of GDP defense spending from NATO allies earns a prominent mention, as does the concept of “realignment through peace” — the idea that “seeking peace deals at the President’s direction, even in regions and countries peripheral to our immediate core interests” strengthens American influence at minimal cost. This is the theory of transactionalist foreign policy working at its best — extracting value and promoting America’s positive influence in the world through presidential dealmaking rather than incurring the burdens of sustained strategic investment.

The China section contains the purest distillation of restrainer thinking. After describing decades of mistaken engagement policy, the NSS pivots:

“If America remains on a growth path — and can sustain that while maintaining a genuinely mutually advantageous economic relationship with Beijing — we should be headed from our present $30 trillion economy in 2025 to $40 trillion in the 2030s, putting our country in an enviable position to maintain our status as the world’s leading economy. Our ultimate goal is to lay the foundation for long-term economic vitality.”

The transactionalist view of the U.S.-China relationship is not unlike the “new model of great power of relations” sought by Beijing: An overwhelming focus on economic development, pursued through mutual advantage — what some might call win-win cooperation. Under this framework, great powers can simultaneously compete and cooperate, extracting benefits through discrete deals even under the conditions of structural rivalry.

This explains the NSS’s puzzlingly optimistic view for the future of U.S.-China relations. After 11 months of whiplash on tariffs, export controls, and defense posturing, the document describes “a virtuous cycle as strong American deterrence opens up space for more disciplined economic action, while more disciplined economic action leads to greater American resources to sustain deterrence in the long term.” The belief that the United States can simultaneously deter China militarily while growing its economy through managed trade is precisely what both economic nationalists and hard-power competitors reject as dangerous fantasy.

What the Contradictions Reveal

The most illuminating passages are where factional worldviews collide within single paragraphs.

Look, for example, at the section on burden-sharing. The NSS declares:

“The United States will stand ready to help — potentially through more favorable treatment on commercial matters, technology sharing, and defense procurement — those countries that willingly take more responsibility for security in their neighborhoods and align their export controls with ours.”

This sentence attempts to reconcile the interests of all three factions at once, but actually exposes how their priorities contradict one another. Hard-power competitors want technology sharing to make allies more capable, but economic nationalists see this as surrendering the technological advantages America needs to rebuild its industrial base. Transactionalists want to induce allies to undertake more of the burden for their defense — by providing them favorable commercial treatment — but this requires lowering the tariffs nationalists insist are permanent policy to reshore American supply chains.

These objectives work at cross-purposes. If the goal is comprehensive technological denial to China, why offer to share technologies with allies who might leak it through inadequate security measures? If the goal is to increase allied defense spending, why condition it on commercial deals that might undermine nationalist reindustrialization? If the goal is burden-shifting to accommodate a multipolar world, why maintain forward military presence that enables allied free-riding and risks dragging America into foreign entanglements?

The NSS cannot answer because each faction would give a different response.

Taking Stock of the Battle Damage

Strategies reveal themselves not in what they promise but in how they force trade-offs. The NSS’s most glaring omission is any theory of prioritization when the factions come into conflict.

If forced to declare “winners” and “losers” in the battle for the NSS, the economic nationalists come out ahead. The document’s commitments to reindustrialization, energy dominance, and supply chain independence are specific, actionable, and unqualified. These are not merely aspirational but policy priorities that enjoy presidential backing and a large degree of bipartisan support and resources.

The transactional restrainers rank second for their influence over the document’s opening and closing frameworks. The NSS explicitly embraces burden-shifting as organizing principle of American statecraft. It describes great power competition as manageable through presidential dealmaking, including through a “mutually advantageous” relationship with China.

Though they have made some superficial gains in American declaratory policy and kept long-running elements of U.S. Pacific strategy intact, hard-power competitors finish last. They get their military commitments and keep Taiwan policy intact, but almost every hard-power priority is immediately qualified by demands for burden-sharing or domestic economic growth. The NSS avoids committing to the sustained defense spending increases that hard-power advocates see as essential, and it acknowledges the need for technological denial but offers no coherent theory of how to achieve it when economic and diplomatic considerations pull in opposite directions.

The Ultimate Question Unanswered

Let us return to that central claim: America wants a “mutually advantageous economic relationship” with China.

What does this mean?

If it means balanced trade with certain guardrails around sensitive technologies — allowing commerce in non-sensitive sectors while denying China capabilities relevant to military power — that is plausibly achievable. But it requires defining what counts as “sensitive” and accepting that China will remain economically integrated with American prosperity, to the chagrin of economic nationalists.

If it means reshoring critical supply chains, rebuilding American industrial capacity, and reducing economic dependence on Chinese manufacturing, then that requires accepting a long-term restructuring with significant near-term costs. It probably also requires accepting that China will not reciprocally depend on American goods, and may retaliate against U.S. efforts to break its own dependence — threatening the framework of “mutual advantage.”

If it means leveraging trade access to extract concessions on non-economic issues like fentanyl, rare earths, or support for the Russian defense industrial base, then that implies the United States will continue to seek opportunities to generate leverage — including through tariffs and export controls — and that these measures are meant to be traded away during negotiation, not tools for permanent economic restructuring or measures undertaken to safeguard national security.

These are three different theories of what a “mutually advantageous” economic relationship with China entails. By embracing all three, the NSS has chosen none of them.

A Frozen Conflict for a New Cold War

The 2025 U.S. National Security Strategy suggests two possible trajectories for American power.

The optimistic scenario is that this document represents the opening bid in an internal negotiation that will eventually produce strategic clarity. Perhaps the NSS’s contradictions are deliberate — laying out all factional positions so that implementation decisions can force choices the document itself avoided. Maybe this is strategic flexibility rather than strategic confusion.

A more sober read is that the NSS has inadvertently frozen the factional conflict within President Trump’s administration, ensuring it continues through 2026 and beyond. Each camp secured enough language to claim partial victory while preventing any alternative worldview from dominating American foreign policy. The result is a document that says everything and therefore commits to nothing.

This is not unusual for National Security Strategies, which often paper over internal disagreements with aspirational language. What is unusual is how transparent the factional seams have become, and the extent to which they are working at cross-purposes.

The NSS was an opportunity to end the bureaucratic war for America’s China policy. Instead, it has formalized the conflict by enshrining all three competing approaches as equally legitimate — and risks perpetuating exactly the policy whiplash that has characterized the first year of Trump’s second term.

As a non-lawyer at the National Lawyers’ Convention, I can’t help but feel a bit like I’m in the worst remake of Suits ever.

But I still hope that I can say some things that might be interesting or provocative for this group of legal scholars, on a topic I’ve spent ten years living at the heart of: Our export control policy, and the modulation of commerce between the United States and China.

The legal architecture we’re using to compete with China was built to regulate Soviet wheat sales, not to contain a manufacturing superpower that controls global pharmaceutical inputs and mineral processing.

I’m a fan of small government, and a deep believer in the limits of state power as articulated in our Constitution.

But I’m also an American citizen who recognizes that our current legal framework is structurally incapable of denying resources in peacetime to a hostile foreign power that is the world’s second-largest economy.

For the past ten years, I have watched our government attempt to prevent technology transfer to Chinese military companies using authorities designed for Colombian drug cartels and Iranian banks.

The result has been predictable, and strategically untenable.

I would point to three failures:

First, our blacklist system is structurally inadequate.

Since 2018, Commerce has added nearly 1,000 Chinese and Hong-Kong based entities to the Entity List.

That sounds impressive — until you realize there are more than 25,000 Chinese companies that supply the People’s Liberation Army with weapons and equipment — and they spawn subsidiaries faster than our interagency process can designate them.

In fact, designating a single entity can take months, sometimes even years — and it doesn’t always stick.

The Xiaomi v. Department of Defense case in 2021 is a clear example of this problem. Here is a company that had received awards from the Chinese military — but was able to successfully challenge its designation because DOD couldn’t prove specific military ties to the satisfaction of a federal judge.

The result has been frustrating: We’re playing whack-a-mole with due-process hammers while China runs a unified strategy designed to exploit our procedural constraints.

Second, we already possess powerful authorities that sit unused.

Executive Order 13873 — the ICTS rule — grants sweeping power to prohibit entire classes of transactions with specific foreign adversaries. The Commerce Department could, tomorrow, restrict all U.S. transactions with Chinese military enterprises.

Yet Commerce has invoked ICTS only twice since 2019. A letter sent to the Department last week from five Congressional committee chairs asked — in my view, rightly — why?

Some will hear this as calling for unchecked executive power. It isn’t. It’s calling for authorities designed for the actual threat we face — with appropriate oversight.

The scale of the challenge is simply too vast to require proving individual malicious intent for every subsidiary of every Chinese military enterprise.

Third, we’re fighting an asymmetric legal war with both hands tied.

I was in Shanghai one month ago today, when China announced a sweeping new licensing regime for rare-earth magnets and their components. The move followed a familiar pattern:

While our system of trade controls is built on auditable blacklists, underpinned by the rule of law, theirs is built on opaque whitelists, with exemptions carved out on the basis of state coercion.

When U.S. companies need rare earths or battery-grade lithium, they must come crawling to MOFCOM for a license. The Chinese government demands they hand over proprietary information: vendor lists, chemical formulas, and full forensics on their supply chains.

It offers no assurance this data won’t reach China’s intelligence services, or their direct competitors. And the U.S. executives I speak with tell me they assume it does.

Meanwhile, we maintain dozens of different restricted-entity lists — each with different statutory authorities, evidentiary standards, and challenge procedures; each restricting access to different resources — federal funding and procurement, operating licenses, and U.S.-origin equipment. A Chinese firm can be on three lists and off four others.

These unintended loopholes in the letter of the law are relics of our national legal debt — one that has grown as a byproduct of the administrative state, and accumulated as we struggled to accept the nature of the competition we are in.

Serious legal reform demands that we consider creating new authorities and institutions fit for purpose. I would suggest three things:

1. Start with expedited designations. If an entity is controlled by the Chinese government or military, designation should take days, not months. I know what you’re thinking — rapid designation sounds like stripping due process.

But I’m not talking about eliminating review. I’m talking about shifting the evidentiary burden: designate fast based on ownership structure, then allow expedited judicial review afterward.

We don’t require proof of individual malfeasance before restricting transactions with Iran’s Revolutionary Guard. Why do we require it for subsidiaries of China’s military contractors?

2. We need list consolidation — one restricted entity database, one standard of review, one adjudication process. Yes, this will require Congress to create unified authority.

Try explaining to your clients why their Chinese counterparty can legally receive U.S. investment despite being on the Entity List, or why a company designated under Section 1260H can still access American capital markets.

The current fragmentation forces law-abiding American companies to navigate a compliance minefield while their Chinese competitors exploit every seam.

3. Finally, implement real reciprocity. When China maintains opaque whitelists for critical minerals, we should match their approach: require Chinese firms to petition for access to our markets.

Look, I understand the discomfort. Many of you have spent careers ensuring the government can’t arbitrarily restrict commercial freedom. That is noble work — it’s part of what makes our system worth defending.

But I’m worried those procedural safeguards — designed to prevent arbitrary government action and uphold the rule of law — are creating arbitrage opportunities for our adversaries to undermine it.

At the end of the day, the question is not whether to abandon due process, but how to adapt it for competition with an adversary that weaponizes our legal principles against us.

The theme of this conference is “New Legal Frontiers,” but the frontier we face is ancient: how a liberal democracy defends itself against authoritarian mercantilism without becoming what it fights.

The question is whether we will adapt our legal architecture to match the competition we’re actually in — or whether we’ll let procedural paralysis make that choice for us.

Thank you.

Anyone who has practiced diplomacy will be familiar with the whiplash that comes from watching carefully prepared talking points get rendered obsolete in real time. I experienced it last week in China — my first visit since exiting government — when the hosts of our Track 2 discussion spent one evening pitching deeper cooperation with the United States, only to spend the next day processing the consequences of Beijing’s sweeping new export controls on rare earth magnets, tariffs on American shipping, and a national security investigation into Qualcomm.

Within 24 hours it became clear how badly Beijing had misread the moment. What Chinese officials at first framed as measured retaliation now looked like overreach — the kind that might galvanize hawks within the Trump administration and accelerate the decoupling both sides claim to want to avoid.

The United States and China are already trying to climb down from this latest escalation. But even a successful leaders’ summit at APEC is unlikely to reverse the deeper shift that has gone largely unnoticed in Washington: Beijing has crossed from reactive nationalism to confident independence — from “China is a big country, and won’t be subject to wanton U.S. policy,” to “China is a big country, and can do what it wants.”

Over seven days and more than twenty meetings across Shanghai, Hefei, and Nanjing with provincial officials, researchers, factory managers, and university administrators, you have to imagine what we saw was carefully curated and tightly choreographed. Still, I was fortunate to be in a position to ask direct questions of powerful people, and was struck by their relative candor.

What follows are a handful of observations — more impression than analysis — about the unique moment we are living through.

1. China No Longer Hides Its Strength

There can be no denying that China is becoming more self-sufficient and making good on its development objectives. Even as a skeptic predisposed to find problems in China’s economic model, I found that everywhere I looked, even subtle and difficult-to-falsify indicators pointed to the same conclusion.

Glance out the window of the high-speed train through Suzhou, and one can see where all the world’s concrete is being poured. Take a peek at a server rack at a mid-range university, and you’ll notice some of the chipsets are made by Huawei, rather than Intel or AMD. Take a look at the phones Party officials lay on the table during meetings, you’ll see a smattering of Xiaomi now litters the typical sea of iPhones. An explosion of Luckin Coffees has crept up where Starbucks and Dunkin once stood.

The road tells the story most clearly. The ubiquitous city bicycles have been upgraded to electric mopeds. Two-thirds of cars now sport green EV license plates. BYDs — once the aspirational face of China’s electric transition — are now so omnipresent they are the default economy-class vehicle when hailing a Didi in a second-tier city like Nanjing.

China’s manufacturing advantage also seems to be transitioning from cheap labor to lights-out production. At an EV factory in Hefei, industrial robots outnumbered their human coworkers at a ratio of 7:1. From piecing together hallway signage, the plant seemed to be meeting its production quotas, slow by an average of 2 percent.

Perhaps most telling is that technological achievements that would have once been classified as state secrets now stand on full display for foreigners to observe in the entry foyers of leading universities: ablative materials, holographic displays, counter-drone systems. Fancy tech demonstrations that once felt forced are now subtly and logically integrated into daily life.

A country once famous for hiding its strength seems to no longer see any value in doing so.

2. China’s Overconfidence Risks Digging Two Graves

Across each city we visited, Chinese policymakers and industrialists seemed to have convinced themselves of the same “skull chart math” that now grips elites in Washington and San Francisco: the idea that the United States and China have reached an inversion point in their relative power, and the arc of history is bending in Beijing’s favor.

You could hear it in how they spoke about American policy and President Trump — as punchlines betraying dysfunction, malice, or incoherence. Chinese scholars were direct in their assessments of U.S. shortcomings in everything from shipbuilding to social cohesion. When I asked whether there was anything China still hoped to learn from the United States, our interlocutors were polite but basically out of ideas. The subtext was unmistakable: China has absorbed what it needed and is now writing its own playbook.

This attitude was unlike any other I have encountered in ten years observing the U.S.-China relationship. After a century of humiliation at the hands of foreign powers, the Chinese Communist Party seems incapable of resisting the temptation to twist the knife — to savor the sensation of its newfound power after so long being denied the same. The reflex is human, and it is not something that can be negotiated with. The danger is what happens when it collides with an American political culture constitutionally incapable of humility.

For all its dysfunction, the United States remains a superpower. It is not merely a prideful country, but an arrogant one — with no memory of life before primacy. Beijing’s self-assurance may be well-earned. But if this month’s trade escalation is any indication, future flexing at American expense will trigger a reaction in both capitals that is more emotional than strategic. And as markets saw last week, the collision of two egos masquerading as nations is not a contest of systems but a test of impulse control.

Beijing has not exactly adhered to “guardrails” laid down during the past twenty years of the U.S.-China relationship. American policymakers, for their part, feel burned by what they see as a decade of broken promises stretching from the Rose Garden to the Delfines Hotel. But without even the pretense of restraint, both sides risk sliding into a cycle of retaliation that neither fully intends nor can easily escape.

3. China Has Sealed Itself Inside Its Own Narrative

China today feels more closed to the United States than perhaps any point since 1972. The explosion of domestic self-sufficiency and years of zero-COVID isolation have left even Shanghai — the mainland’s most cosmopolitan city — wary of outsiders. Members of our cohort found themselves waiguoren’d even in major cities: children staring wide-eyed, strangers asking for photos. The foreign population that left during the pandemic simply never came back, and you can feel their absence everywhere.

That physical isolation now mirrors an intellectual one. With fewer foreigners and an ever-tighter information environment, even sophisticated Chinese elites are working from caricatures of the United States. The questions I fielded from diplomats, scholars, journalists, and cab drivers — whether there are any China experts left in the U.S. government; whether tariffs are designed to deliberately collapse China’s economy; or whether the United States may be deliberately goading China into launching a disastrous war over Taiwan — revealed how distorted the picture of the United States has become. The Party’s success in sealing out Western influence has also sealed in ignorance about the American policy process and political economy.

Foreign students feel isolated, too. Of the dozen I met from the Global South, all said they would rather study in the United States, if offered equivalent scholarships and visa schemes. They complained that assimilating to life in China as a foreigner is incredibly difficult — steep Chinese language proficiency requirements enacted in 2018 have raised the barriers even higher. Though China’s universities are technically world-class, their primary draw remains financial and logistical rather than cultural or aspirational.

After decades spent demanding respect abroad, the irony is that China has engineered an environment so controlled and self-referential that it no longer understands the world it seeks to lead — or the superpower it aims to surpass.

4. China’s State-Led Model Is Consuming Itself

After a century of brutal experimentation, China seems to have worked out many of the kinks of authoritarian capitalism. What problems remain are structural, baked into its political and economic development model. The same isolation that once fueled its rise has now removed the feedback loops that make course correction possible.

Youth unemployment is through the roof. The problem is so bad that Party officials have ceased denying it. Try navigating a mall on a Thursday afternoon in Shanghai: The coffee shops are overflowing with unemployed young people, laptops open, nursing single drinks for hours. The default plan for most Chinese students we spoke with was to pursue perpetual higher education — staying in school as long as possible to delay entering a brutal job market — or to launch a startup and compete in an entrepreneurial ecosystem that puts the Hunger Games to shame.

The brutal burn-and-churn model is starting to take a visible toll. The Chinese system has long fused social harmony with relentless competition, producing strivers willing to work harder for longer than almost anyone else on earth. But when that intensity meets a shortage of opportunities for meaningful advancement, the result is exhaustion and quiet disillusionment. The Party Secretary of one innovation park explained that in such a hyper-competitive domestic environment, many Chinese tech enterprises start out by trying to gain a foothold abroad. Today, “going out” (出去) is best understood not as the product of a deliberate policy, but a lifeline for Chinese enterprises to weather the lawless competition at home, where rules are arbitrary and moats don’t exist.

Local governments are also running out of fuel. One local official admitted that tech parks are now offering firms free or heavily discounted office space because they are running out of cash. Meanwhile, there are so many startups that banks can’t vet them all, and almost none qualify for loans. This has led to an explosion of YC-like vetting and investment platforms in nearly every major tech hub, many underwritten by the state.

Elsewhere, statism has succeeded almost too well. We spoke with a multinational that has slow-walked its own multibillion-dollar lithium mining project, and may not even see it completed, because subsidies cratered the market price well below production value. China’s state-led innovation model remains unmatched at generating cheap and reliable technology — but it is that very efficiency that is now destroying the market viability of the industries it set out to dominate.

5. China Still Believes in Its Future

There’s a texture to a country that can’t be captured through policy documents or sardonic social media posts — unguarded glimpses of how a society actually feels about itself, which can only be witnessed with one’s own eyes and ears.

The most impactful part of my visit to China was not any particular factory tour or official briefing. It was a Monday night of no particular significance, when two thousand people had gathered in Hefei’s Swan Lake Park to dance under the street lights. Young couples, retirees, kids chasing each other through the crowd — there was laughter, the smell of warm chuan’r, and impromptu karaoke.

It struck me then that maybe there is more to China’s system worth studying than its subsidies or industrial policy. Maybe, in our quest to disprove communist competence, we have under-appreciated its machinery for cultivating civic faith.

I am a relentless advocate of the dignity of the individual and the American Idea. But it is clear that dismissing depictions of Chinese patriotism and happiness as mere propaganda misses an important source of its rising power.

If the pessimists are right about American decline, if we really are headed toward some kind of Pax Sinica, it won’t be because of how many EVs roll off the line at a BYD factory — it will be because China has rediscovered something we’ve lost: How to make people feel part of something larger than themselves; how to take pride in historical achievement; how to sustain the promise of a national project worth contributing to.

That was the most unsettling part of this visit. Not sophisticated technology demonstrations or the premature flexing of a rising power — but the feeling of a country that still believes in its own future, and the quiet realization of how long it’s been since we could say the same.

As world leaders gathered in New York for the 2025 UN General Assembly, hallway chatter was filled with the same question:

What the hell is going on with American policy toward China?

The confusion is understandable. The second Trump administration has assembled the most hawkish team of China advisors in American history, led by a president whose deal-making instincts and personal rapport with Xi Jinping often put him at odds with their counsel.

This tension has produced nine months of policy whiplash — tariffs escalating to 145 percent then plummeting to 30 percent, AI chip bans reversed for revenue-sharing arrangements, $400 million in Taiwan military aid blocked to smooth trade negotiations. Senior officials suggest sheepishly that all this flip-flopping might be a tactic “to keep the Chinese on their toes.” The truth is much uglier:

U.S. policy toward China in 2025 is not proceeding from a coherent strategy. It is best understood as the chaotic, real-time output of a power struggle unfolding across the U.S. interagency.

While Trump’s first administration was famous for assembling a “team of rivals,” Trump 2.0 takes the dynamic to new heights — featuring a bureaucratic civil war (and occasionally literal fist fights) between economic nationalists seeking to rebuild American industrial capacity, hard-power competitors determined to maintain technological and military superiority, and transactional restrainers pursuing concrete deals that reduce the cost of foreign entanglement.

The tragedy of Trump’s China policy is that each camp has legitimate goals and credible policy ideas to achieve them — but pursuing all three at once creates a strategic schizophrenia that leaves America weaker than committing fully to any single path.

The past nine months have delivered contradictory lurches on trade, technology, Taiwan, and American alliances in Asia. A coherent National Security Strategy — one that finally clarifies what the United States wants from China — is the administration’s best path out of this morass.

Three Warring Tribes

Many in Washington consider it gauche to discuss the influence of individuals in shaping policy. But for an issue set as tangled as American interests in China, understanding factions is essential:

The Economic Nationalists look at America’s hollowed-out industrial heartland and see the wages of naïveté. For decades, they argue, Washington treated trade as a technical matter for economists rather than a strategic choice with profound implications for national power — offshoring entire industries, gutting manufacturing communities, and nurturing a dangerous dependence on unreliable partners. Their worldview is simple but compelling: you cannot have national security without economic security, and you cannot have economic security when your adversary controls your supply chains. Tariffs are therefore an instrument of national survival, a way to rebuild the industrial capacity that once made America a superpower. If allies complain about disrupted supply chains, so be it; they have been free-riding on American sacrifice for long enough.

The Hard-Power Competitors look at the same landscape and see a different failure mode: decades of underinvestment in the military and technological capabilities needed to compete with a peer adversary. They recognize that China is not the Soviet Union — it is wealthier, more technologically sophisticated, and deeply integrated into global supply chains. Beijing is building the world’s largest navy, extending and weaponizing its foreign influence, and seeking to dominate the industries that will define 21st-century power. The hard-power view holds that only sustained American technological superiority, forward military presence, and a network of capable allies can deter Chinese aggression and preserve the peace in Asia. That means accepting lost commercial opportunities from export controls, friction with allies over burden-sharing, and sticker shock from sustained investment in national defense.

The Transactional Restrainers look at both approaches and see an unsustainable trajectory. They ask: How long can America afford to simultaneously confront China, subsidize European defense, garrison the Middle East, and maintain hundreds of overseas bases while running a $2 trillion deficit? This view rejects the premise that America must choose between nationalist autarky and endless strategic commitment. It argues instead for concrete deals that advance specific U.S. interests, burden-sharing arrangements that make allies pay their fair share, and a willingness to negotiate with adversaries when negotiation serves American interests. The transactional view maintains that, two decades past the unipolar moment, it is time for the United States to reckon honestly with the limits of its power. It calls for ruthless prioritization, but this requires political capital and diplomatic finesse that proves difficult to sustain. The result is less often a strategic rebalancing than a series of discrete deals pursued for immediate advantage — and the President himself is the purest embodiment of this worldview.

Each of these three camps is seized with legitimate concerns about the future of American power. The challenge is that the tools best fit for each problem set often work at cross-purposes — and the President has proven unwilling, or perhaps entirely unable, to choose decisively from among competing priorities.

The result has been as damaging as it was predictable.

Nine Months of Chaos

Tariffs: Chasing Two Rabbits and Catching Neither

Trade policy is the simplest test of the administration’s strategy: Are tariffs leverage to extract concessions, or are they the policy objective itself?

For economic nationalists, the tariffs are the point. The goal is not to force China to change its behavior through temporary pressure, but to permanently restructure trade relationships and rebuild American industrial capacity. In this view, even if Beijing made every concession Washington demanded, significant tariffs should remain to protect domestic industries and workers. The April 2 “Liberation Day” rollout of a 10 percent universal baseline tariff, plus a 34 percent reciprocal tariff on China, was the purest distillation of this vision.

Transactional restrainers see tariffs quite differently — sticks used to generate leverage in negotiations on discrete issues like curbing the flow of fentanyl precursor chemicals, cracking down on illegal migration, or shuttering support for the Russian war effort. But the balance of economic sadism and masochism is easier struck in theory than practice. When tariffs peaked at 145 percent on Chinese goods in early April, markets panicked. The VIX hit levels not seen since 2008 and 2020. It was then that transactionalists saw an opportunity to advance their interpretation of tariffs-as-leverage. The May 12 Geneva agreement reduced tariffs to 30 percent for 90 days — stabilizing markets, resuming the flow of rare-earth magnets, and extending the window for further dealmaking.

Hard-power competitors grow frustrated with the entire debate. To them, trade policy should generally favor open markets that compound American economic power — with some exceptions to deny China the resources required for its military modernization. While it is true that shuttering viable export markets could succeed in destabilizing China’s economic development, tariffs that alienate European and Asian partners risk undermining the broader containment strategy.

Tariffs can be elegantly simple and devastatingly effective — but only when wielded toward a single, clear objective. If tariffs are leverage, they must eventually be lifted when China makes concessions — but economic nationalists will view any lifting as a betrayal of American reindustrialization. If tariffs are permanent policy, then what exactly is America negotiating for? And if the goal is strategic denial, why provide China with any outlet to sell its goods and sustain its economic rise?

The economic record reflects this confusion. The bilateral trade deficit with China has narrowed — which nationalists rightly highlight as progress. But China has adapted, and is heading toward a record $1.2 trillion global trade surplus. American farmers have lost market share as Beijing slashed purchases of soybeans. The Tax Foundation estimates GDP will shrink by 0.8 percent, over 800,000 jobs will be lost, and households will pay $1,300-$1,600 more annually. Perhaps most concerning is evidence of widespread tariff evasion — primarily via transshipment through Vietnam and Mexico — which undermines the entire regime.

Without a clear answer to whether tariffs are a policy goal or leverage in pursuit of something else, the administration cannot know when it is winning or losing.

Technology: Gambling Security for Prosperity

The battle over technology policy has produced the clearest fault line in the administration’s approach to China: whether to treat advanced chips as strategic assets to be denied, or as commercial products to be sold under terms that generate revenue for American tech companies and the U.S. government.

The administration began with hard-power priorities. In March, the Commerce Department added dozens of firms to its Entity List for supporting China’s AI, hypersonics, and quantum computing programs. Officials at first blocked the sale of NVIDIA’s lower-capability H20 chips to China, closing what they saw as a dangerous loophole in Biden-era export controls. In May, new restrictions on chip design software targeted a critical chokepoint in semiconductor development.

Then came the reversals. In August, the President authorized NVIDIA and AMD to resume sales of high-end AI chips under an unprecedented 15 percent revenue-sharing agreement with the U.S. government. The software ban was rescinded in July after China retaliated by restricting rare earth exports.

Each faction views these moves through a different lens. The hard-power case maintains that denying chip access slows China’s progress in developing frontier AI capabilities. Even a 3-6 month gap could determine whether recursively self-improving algorithms first emerge in Hangzhou or San Francisco, with compounding strategic effects. And once China develops indigenous chip alternatives — as it has already spent hundreds of billions of dollars attempting — American leverage over its software trajectory will quickly erode. Best to choke China’s compute supply while we still can.

The transactional counter-argument questions the value proposition and capability timelines: Today’s export controls choke revenue for U.S. companies that would otherwise fund R&D for next-generation chips, potentially ceding long-term technological leadership. Transactionalists understand that China will eventually develop its own alternatives. Better to maintain market access and generate R&D dollars (and government revenue) while we still can. The alternative — complete restriction — forces Chinese self-sufficiency while imposing near-term costs on American firms, they say.

Economic nationalists find themselves divided. Some align with hard-power advocates, seeing tech denial as an effective means of economic warfare. Others worry that export controls, by forcing China to indigenize in 2025 rather than 2030 or 2035, ultimately create a more formidable competitor capable of flooding global markets earlier than expected.

The three factions cannot agree on what technology restrictions are meant to accomplish, which has allowed each to cherry-pick evidence that supports its claim to victory. Hard-power advocates measure success in the demonstrable delay export controls caused to China’s frontier software capabilities. Economic nationalists view expansive controls as a means of forcing permanent supply chain restructuring, evinced by the administration’s long-running plan to tariff foreign-made chips. Transactionalists, by contrast, see controls primarily as leverage — both against China and against America’s own tech companies — and have succeeded in negotiating them away for revenue-sharing deals or rare earth relief.

But controls that constantly shift between denial, monetization, and negotiating leverage ultimately risk becoming half-measures. By pursuing all three simultaneously, the Trump administration is unlikely to buy meaningful strategic time, generate sustainable revenue, or break the gravitational pull of Chinese manufacturing.

Taiwan: Clarity Undermined by Commerce

Taiwan stands the most to lose from the Trump administration’s factionalism.

In many ways, the tension between strategic commitment and burden-sharing mirrors the same dynamics found in any other debate about partnership management: Hard-power competitors urge stronger commitments to Taiwan to deter a Chinese invasion, while transactional restrainers question why America should defend Taiwan when it refuses to pay for its own protection.

It is the rise of the economic nationalists — who resent Taiwan’s simultaneous domination of the global semiconductor industry and inadequate defense spending — that risks disturbing this delicate equilibrium.

A clear victory for the hard-power faction came at the May 31 Shangri-La Dialogue, where War Secretary Pete Hegseth warned that “Communist China will not invade Taiwan on President Trump’s watch” and declared that if deterrence fails, the United States is “prepared to fight and win decisively.” His message was backed by an unprecedented tempo of military exercises in the Indo-Pacific, including a revived REFORPAC, expanded Balikatan, and record-setting Talisman Sabre drills.

Yet the President’s personal actions have systematically contradicted this posture. In September, he withheld over $400 million in military aid to Taiwan to facilitate trade negotiations with Beijing. He denied Taiwan President Lai Ching-te’s request to transit New York and has repeatedly lamented that Taiwan fails to pay for its protection.

The economic nationalists have added a third dimension to this tension that radically changes the character of American cross-Strait policy. In their view, Taiwan’s stranglehold on advanced semiconductor manufacturing represents a dangerous vulnerability that Taipei has weaponized for strategic protection. They point out that TSMC’s Arizona fab construction has lagged behind schedule, while Taipei has imposed technology transfer restrictions that limit what can be manufactured abroad. Meanwhile, Taiwan spends just 2.5 percent of GDP on defense while enjoying implicit American protection worth far more than its collective defense budget. The nationalists see this as extractive rent-seeking: Taiwan has built a “silicon shield” that forces American protection while refusing both adequate self-defense and the technology transfers that would reduce U.S. dependence. This worldview transforms Taiwan from a democratic partner under threat into a free-rider profiting from American vulnerability — a framing that makes abandonment thinkable in ways the traditional hard-power—transactionalist debate never could.

The possibility that Taiwan could become a bargaining chip in a broader U.S.-China détente goes largely unspoken in diplomatic circles, yet allied behavior suggests the fear is real. European leaders are pursuing “strategic autonomy” with urgency, while Southeast Asian nations are intensifying their hedging between the superpowers. Across multiple theaters, U.S. partners are quietly preparing for scenarios where American security guarantees become negotiable — not because of any single policy shift, but because Washington’s position in nearly every bilateral relationship has grown wildly unpredictable. Beijing watches these hedging behaviors carefully, understanding that allied doubt about U.S. resolve is nearly as valuable as any direct American concession regarding Taiwan.

Beijing is exploiting both the incoherence in U.S. cross-Strait policy and the cracks it is generating with partners. The People’s Liberation Army has escalated its activities in a manner INDOPACOM Commander Paparo describes as “dress rehearsals for forced unification.” These have included a 300 percent increase in ADIZ incursions, subsea cable sabotage, and development of specialized deep-sea cable-cutting vessels. Beijing continues to escalate its lawfare campaign, falsely claiming that UN General Assembly Resolution 2758 resolved Taiwan’s ultimate political status, and pressuring international organizations and companies to accept this interpretation. Meanwhile, America’s regional partners watch Washington withhold aid from Taiwan while demanding they provide their own commitments to defend it.

Again, the tragedy is that each faction within the Trump administration is working to address real problems in America’s Taiwan policy. Transactionalists rightly ask whether current defense arrangements are sustainable; hard-power advocates understand that Taiwan’s importance to regional security and global economic stability demands greater investment in its defense; and economic nationalists raise legitimate concerns about Taiwan’s vulnerability and technological protectionism.

The challenge is that attempting to resolve all three problems at once creates the worst of all worlds: From Beijing’s perspective, U.S. commitments appear contingent and negotiable. From Taipei’s perspective, defense planning becomes nearly impossible when American support turns on a dime. For regional partners, the lack of a coherent U.S. approach to Taiwan undermines the message that they must invest more to defend it.

Allies: Failing An Impossible Loyalty Test

A version of the contradictory demands facing Taiwan now extends to several other U.S. allies in Asia. The hard-power faction correctly recognizes that alliances constitute America’s key asymmetric advantage over China, and presses them to adopt a more assertive posture. Transactional restrainers raise legitimate questions about burden-sharing and whether decades-old arrangements still serve American interests, while economic nationalists see in some allies competitors who have benefited disproportionately from access to U.S. markets and a global trading system no longer fit for purpose.

The challenge has been reconciling these perspectives in practice. While many tensions over burden-sharing and technology transfer predate this administration, the pattern that has emerged under Trump 2.0 involves demanding allies simultaneously strengthen their commitment to collective defense against China while negotiating hard on trade and defense cost-sharing — competing pressures that undermine trust and invite Chinese coercion.

Consider Japan, which has embarked on its largest defense buildup since World War II, committing to 2 percent of GDP and acquiring capabilities like Tomahawk cruise missiles — exactly what hard-power advocates have long requested. Yet when Tokyo sought to co-develop next-generation fighter aircraft with integrated American systems, Washington refused to share certain advanced avionics and stealth technology, fearing that today’s co-development partners might become tomorrow’s competitors in global defense markets. Meanwhile, despite negotiating a massive $550 billion trade and investment package, Japan still faces 15 percent baseline tariffs and continued pressure for additional burden sharing.

The same contradiction appears with Australia under AUKUS. The landmark agreement is exactly what hard-power strategists fought so hard to achieve: a close ally making a multi-decade, hundred billion dollar commitment to buy nuclear-powered submarines that would significantly enhance deterrence. The submarines will even be built in American shipyards — precisely what economic nationalists demand. Yet this achievement created its own problem: U.S. submarine shipyards cannot build boats fast enough to meet the U.S. Navy’s requirements, let alone Australia’s. A months-long Pentagon review of the production bottleneck undermined confidence in American reliability.

South Korea illustrates the full trilemma: committed to $350 billion in U.S. investments, while facing demands to raise defense spending to 5 percent of GDP (one of the world’s highest), and a 15 percent base tariff intended to protect American manufacturing. From Seoul’s perspective, this creates an impossible bind: spend more on defense, invest massively in the U.S. economy, absorb tariffs on its exports, and do it all while Washington questions its commitment.

India reveals how the factional objectives in other domains can work at cross-purposes when applied to China. Critical to the Quad framework championed by hard-power advocates, India has been hit with tariffs for its refusal to stop buying Russian energy — a transactional tool meant to pressure Putin instead undermines a partnership central to countering Beijing. The President’s decision to forgo a planned Quad summit compounded the signal that India’s value in balancing against China ranks below other American priorities. Some observers now warn the administration sees New Delhi as “a rival, not a partner” — a nightmare for China hawks.

The administration’s contradictory demands have made for an impossible balancing act across foreign capitals: Washington wants allies to be capable enough to deter China but not so capable they compete with the United States; wealthy enough to increase defense spending but willing to direct that spending primarily to American firms; and assertive enough to confront Beijing but deferential enough to accept American leadership.

Allied confidence in American leadership has cratered. A Lowy Institute poll found that only 36 percent of Australians now believe the United States will act responsibly in the world — a 20-point decline from last year. In Europe, only 22 percent of respondents now consider the United States an “ally” — down from over half just 18 months earlier — with most now viewing it merely as a “necessary partner.” Meanwhile, Japan and South Korea have held unprecedented bilateral summits to coordinate their approaches to American unpredictability.

Within the Trump administration, transactionalists are right that America pays too much for alliance defense while allies pay too little. Nationalists are right that channeling allied investment into the American industrial base serves U.S. interests. Hard-power advocates are right that capable allies multiply American strength. But pressing all three demands simultaneously creates an impossible loyalty test: allies cannot spend more, buy American, and build capable independent forces at the same time. The result is not enhanced burden-sharing but alienated allies with inadequate defense capabilities.

How China Sees It: Exploiting the Chaos

China’s strategy for managing the Trump administration is to divide and profit. Beijing ensures hawks must demand more resources to contest an increasingly capable adversary, then offers nationalists narrowed trade deficits and transactionalists dealmaking opportunities — keeping the factions at odds with each other rather than united against China.

This strategy has involved aggressive forum shopping and remarkable flexibility:

Countering the nationalists through diversification. China has relentlessly diversified its trade, blunting U.S. tariffs by deepening ties with ASEAN, the EU, and the Global South. At forums like the Shanghai Cooperation Organization summit, Xi frames China as the champion of multilateralism against American unilateralism. The China-Japan-ROK trilateral — once a toothless façade — is now an attractive instrument for all three countries to dangle as they push back against U.S. protectionism.

Appealing to transactionalists with calibrated retaliation. Beijing has demonstrated both capacity to inflict tremendous pain with 125 percent tariffs and rare-earth magnet bans; and willingness to de-escalate when deals are on the table, as during the Geneva truce. Xi’s messaging to Trump mixes cooperative language with specific demands, creating off-ramps for the President to declare tactical “wins” that cost China little strategically but open the door to potential American concessions on its core interests.

Bypassing hard-power restrictions through asymmetric innovation. Rather than competing directly in areas where U.S. tech controls are most effective, China is pursuing a “changing lanes” strategy — accelerating development of non-silicon transistors and alternative computing architectures to bypass American chokepoints. DeepSeek’s R1 model rivaling Western AI systems at a fraction of the cost demonstrated the power of its innovation ecosystem, and reminded hawks that they are running out of leverage.

Perhaps most significantly, Beijing has positioned itself as the responsible steward of global governance — at the exact moment Washington appears to be abandoning that role. In the past nine months, China has increased its funding for UN agencies, secured leadership roles in key international organizations, and still championed BRICS, SCO, and AIIB as alternatives to the international order the United States leaves behind.

This creates a dilemma that the administration has yet to grapple with: Does Washington welcome China shouldering more of the burdens of global governance, consistent with the transactional view that America is overextended? Or does it view any expansion of Chinese influence in international institutions as a threat to be contested, as hard-power advocates have long maintained? The nationalist faction, meanwhile, views multilateral institutions as constraints on American sovereignty, and so is largely indifferent to their leadership. As things stand, Beijing benefits from the Trump administration’s contradictions. To the developing world, China presents itself as a reliable partner, in contrast to an America that cannot decide whether it wants to lead, follow, or exit.

Each of the factions driving U.S. China policy today can claim small victories. Nationalists point to narrowed bilateral deficits, transactionalists to tactical dealmaking, hard-power advocates to a more muscular defense posture — while China advances the only strategy that matters: preventing the development of a unified policy that might contest its growing power.

Four Questions a National Security Strategy Must Answer

The chaos of the last nine months is not the product of a failed strategy, but the absence of one. The forthcoming National Security Strategy (NSS) is the most straightforward way to impose coherence on a fractured policy. To do so, it must define a theory of victory that answers four questions:

1. What Should the United States Want from China? Is the goal a managed competition with limited areas of compelled cooperation, or is it a comprehensive confrontation aimed at weakening the Chinese Communist Party? The transactional faction sees potential for deals on fentanyl, migration, or Russian armaments; while the hard-power faction views any cooperation as a dangerous illusion that legitimizes the regime. The NSS must clarify whether any “guardrails” are possible or desirable, or if the only objective is to win a zero-sum contest.

2. What are the Bounds of Economic and Tech Competition with China? Is the objective to surgically protect specific military-adjacent technologies, or is it to wage a broader economic war to thwart China’s rise? If the goal is comprehensive decoupling, as the economic nationalists desire, the NSS must define the price the U.S. is willing to pay in consumer costs, allied friction, and market disruption. As the tug-of-war over rare-earth magnets has revealed, the U.S. economy is not currently structured for such a fight. The NSS must define an end state: is it about winning market share for U.S. companies or permanently denying capability to Chinese ones?

3. What Role Should China to Play in the World? As the United States sheds the burdensome mantle of global governance, to what degree should it resist China’s efforts to pick it up? Is a China that provides public goods and mediates conflicts a threat to U.S. primacy or a welcome burden-sharer? The hard-power faction sees any increase in Chinese global influence as a direct threat, while transactional restrainers may very well see it as a welcome reduction in U.S. costs. The NSS must articulate a vision for America’s role in a future global order — and China’s place within or outside it.

4. What Kind of China Can the United States Live With? Does the United States still have a vested interest in the political and human rights of people in Hong Kong, Xinjiang, Tibet, and Taiwan? Or has the competition become a purely realist struggle where values are secondary to interests? It is true that defending these values incurs real costs, clashing with the transactionalists’ desire for deals and the restrainers’ desire to avoid entanglement. The NSS must be clear about what price, if any, America is willing to pay to defend the dignity of individuals in their struggle against an authoritarian machine.

The Default Trajectory

Without a decisive National Security Strategy that answers these questions, the default trajectory of American power is not a stalemate but strategic erosion.

The Trump administration will likely continue to achieve tactical, transactional “wins” that feel like successes in the moment but mask a deeper loss of strategic ground. The current pattern — policy shifts driven by nationalists and hard-power hawks, followed by market panic and a tactical retreat engineered by transactionalists — costs precious time, resources, and relationships with allies.

This approach could stumble into “catastrophic success” by provoking China into a premature overreach that galvanizes hawks and triggers allied balancing. More likely, however, is a path of “successful catastrophe” — superficial wins like a reduced bilateral deficit or a temporary trade truce — that mask the reality of allies growing more alienated, China accelerating its technological self-sufficiency, and the American public tiring of the economic rollercoaster.

America is not competing with China because it cannot agree on what that competition should entail. The greatest risk for the Trump administration is not that any one of its internal factions will win the war for its China policy, but that their continued conflict will ensure America loses.

Three hundred thousand kilograms of methamphetamine precursor chemicals sit in a Houston warehouse, their blue barrels arranged in an oddly orderly display of chaos. The chemicals — enough to produce a million kilos of meth — were bound for Sinaloa from China when U.S. authorities intercepted them last week. Officials celebrated it as the largest seizure in American history, “a major win for public safety.”

But a record seizure is not a victory. It is a glimpse of the flood we are failing to stop. And if we are still catching this much meth 50 years after first declaring war against it, then we should shudder to think of what is happening with fentanyl, the leading cause of death for young Americans — which crosses our border in quantities too small to seize.

In the 12 years since it first materialized on American streets, Washington has treated the fentanyl crisis as a law enforcement problem with a public health component. We’ve indicted Chinese chemical companies and sanctioned their executives. We’ve militarized the border, deployed sophisticated detection equipment, and still watched overdose deaths climb beyond 75,000 annually.

The truth few in Washington want to admit is that fentanyl is the first drug crisis where we have no leverage. Too deadly for our institutions to absorb, too compact for our border agents to catch, we are left with only one option: stop it from being made at all.

It’s going to be expensive.

It’s Not a War — It’s an Economy

Every great power that has faced a narcotics crisis has at first misdiagnosed it. The British considered opium in China to be a trade issue until they realized it was eating the Qing Dynasty from within. America treated crack cocaine as a criminal justice problem for a decade before recognizing it as a symptom of social disintegration. America today is making the same category error with fentanyl, treating symptoms while ignoring the disease.

History offers unforgiving lessons. When the British flooded China with opium in the 1840s, the Qing Dynasty tried everything: moral suasion, then targeted enforcement, then prohibition. Nothing worked until Mao simply shot every addict and dealer he could find — a solution unavailable to democracies. The Golden Triangle heroin trade survived decades of DEA operations, military interventions, and crop substitution programs. It only declined when Chinese synthetics made poppy cultivation obsolete. Colombia’s cocaine cartels endured billion-dollar counternarcotics campaigns, only fragmenting when Mexican competitors offered better logistics.

Each case teaches the same lesson: Traditional supply-side interventions — raids, seizures, slash-and-burn campaigns — cannot crush a drug trade when demand remains robust and profits astronomical. A kilogram of fentanyl precursors worth $1,000 in China becomes $1 million worth of street drugs in America — a 1,000x return that no amount of enforcement can deter.

Why America Can’t Address Demand

Strip away the political posturing and bureaucratic inertia, and America has exactly three options for curbing opioid demand. All involve tradeoffs that our politics have made nearly unthinkable.

Option 1: Medicalization. Treat addiction as a chronic disease. Provide pharmaceutical-grade opioids in clinical settings, collapsing the black market by removing its customers. When Switzerland did this with heroin in the 1990s, overdoses fell 64 percent. The first Trump administration nodded in this direction, authorizing $6 billion in treatment funding and expanding Medicare coverage for related services. But fentanyl is not heroin. It is 50 times more potent, with relapse rates above 40 percent even under treatment. Scaling “medicalization” would mean admitting that some percentage of Americans will remain chemically dependent indefinitely, and that the state will be their dealer. No U.S. politician will own that choice.

Option 2: Coercion. Make addiction intolerable. Mandate treatment and strip services from active users. Singapore executes dealers and locks addicts in detention for years. Japan stigmatizes addiction so thoroughly that users are pushed to the margins of society. The model works — but only by exercising a level of social control that would shred the Fourth Amendment and abandon the millions of Americans already struggling with addiction.

Option 3: Resignation. Accept 75,000 annual deaths as the price of a free society. Let fentanyl burn through vulnerable populations until it reaches some grim equilibrium. This is our current policy, dressed up with enforcement theater to maintain the illusion of action.

The political economy of fentanyl makes demand reduction nearly impossible. The communities most devastated — Rust Belt towns, rural America, and the urban poor — lack political power. Meanwhile, the sectors with capacity to intervene — pharmaceutical companies and the treatment industry — are structured to manage the crisis, not resolve it.

Which leaves supply.

Why China Holds the Key to Supply

The fentanyl supply chain is elegantly simple. Chinese companies produce precursor chemicals that aren’t technically illegal — compounds structurally similar to scheduled substances, but modified just enough to evade regulation. They ship these to Mexico, where cartels complete the synthesis in makeshift labs. The finished product crosses our border in quantities so small that a year’s supply for a mid-sized city fits in the trunk of a Nissan Altima.

This is what makes fentanyl different from every previous drug epidemic. Cocaine required thousands of acres of coca, industrial-scale processing facilities, and multi-ton shipments to turn profits. Heroin needed poppy fields visible from space. Meth required pseudoephedrine in quantities that would raise eyebrows at your local Walgreens.

Fentanyl requires only chemistry. A few shipping containers of Chinese precursors can amount to America’s entire annual supply. The dose is so potent — just 2 milligrams can kill — that interdiction becomes mathematically impossible. We could inspect every vehicle crossing the border and still miss enough fentanyl to kill millions.

This is why, unlike past drug wars, the most effective chokepoint is not our southern border. It’s Chinese chemical plants. There are perhaps a few hundred companies in the world capable of producing fentanyl precursors at scale. The overwhelming majority of them are in China. By monitoring these facilities and tracking their shipments, we could avoid the pitfalls of blunt-force interdiction.

We could disrupt the entire supply chain at its source.

What We Need China to Do

Beijing knows exactly how central it is to the global synthetic opioid supply chain. In 2019 it imposed class-wide controls on fentanyl analogues, and since then it has plodded along with U.S. demands to schedule certain precursors. Law enforcement cooperation between the two countries is not entirely hollow: Chinese authorities occasionally raid a lab, arrest some executives, and issue stern warnings to industry. But for every precursor they ban, chemists create three substitutes. For every firm they close, two more pop up in another province.

Forget the working groups and diplomatic coalitions. Disrupting cartel operations requires four concrete measures:

1. Chemical Birth Certificates. Every batch of fentanyl precursor should receive a unique identifier at the point of synthesis, tracked through sale, export, and end-use. When Mexican authorities seize precursors in cartel labs, we should be able to trace them directly back to the Chinese factory that produced them. This isn’t technically difficult — the United States already tracks nuclear materials this way using batch IDs, Material Balance Areas (MBAs), and centralized reporting. Many pharmaceutical manufacturers already log batches of active ingredients for quality control. If China were serious about combatting fentanyl production, it could construct a similar system with tamper-evident barcodes, QR codes, or RFID tags.

2. Know-Your-Customer Rules. Chinese chemical firms should be legally required to verify the legitimacy of their buyers — no more shipments to “Juan’s Cleaning Supplies” in Culiacán. A company that handles some of the most hazardous materials on earth should only be shipping its products to real businesses, with real addresses and end-use declarations. Chinese banks already follow similar rules under the country’s Anti‑Money Laundering Law; chemical companies can be held to the same standard. Last week, the U.S. House of Representatives passed legislation authorizing sanctions on firms that refuse.

3. Export Pre-Clearance. U.S. export control officers already conduct end-use checks in China for sensitive technologies — interviewing companies, inspecting facilities, and verifying that goods go where they are supposed to. These visits inform designations on the Commerce Department’s Unverified List (UVL), which flags Chinese entities that obstruct or evade scrutiny. We should apply a similar system to fentanyl precursors. Chinese firms that want to export dual-use chemicals would be eligible for pre-clearance inspections. Passing a check would ensure fast-track access to legitimate markets, while failing or refusing access would result in severe financial and export penalties.

4. Financial Transparency Requirements. All payments for precursor chemicals should flow through monitored, auditable channels. China is, in practice, a cashless economy. No legitimate pharmaceutical company should need to accept duffel bags of RMB or million-dollar crypto transfers. If the cartels can’t pay for precursors, they can’t make fentanyl.

Why China Won’t Do It

Some in Washington maintain that Beijing’s inaction is not a failure of capacity, but a strategic choice — to tolerate, or even subtly abet, the unraveling of American society. It is a cold, cynical logic: Every American lost to fentanyl is one fewer soldier in a Taiwan Strait crisis. Every dollar spent on addiction treatment is one that cannot be spent scraping rust from ship hulls or rebuilding the arsenal of democracy.

Beneath the air of conspiracy lies a more plausible and unsettling truth: China doesn’t have to weaponize fentanyl. It only has to let the market do its work. Chinese companies make profits, Mexican cartels handle distribution, and Americans die — 75,000 a year, more than Vietnam, Iraq, and Afghanistan combined, every year.

When pressed for aid, Chinese officials cite real constraints. They oversee 5,000 companies producing 44 percent of the world’s chemical supply. Many precursors have legitimate uses in plastics, pharmaceuticals, and agriculture. They can’t monitor every transaction, inspect every shipment, and verify every end-user. It would crater their chemical industry, they claim, disrupting global supply chains for everything from antibiotics to electronics.

This is both partially true and completely irrelevant. During COVID-19, China implemented QR-code surveillance for 1.4 billion people in a matter of weeks. The CCP monitors every social media post for political dissent. It tracks Uyghurs’ household purchases down to the kitchen knife. When the CCP wants to control something, state capacity materializes instantly.

It doesn’t track fentanyl precursors because it doesn’t want to.

Creating Real Incentives

The Biden administration tried to coax Beijing into cooperation through the familiar rituals of diplomacy: working groups, coordinated statements, and targeted sanctions on a handful of firms. The result was predictable: Companies dissolved and reconstituted under new names. Enforcement was piecemeal. Beijing scheduled a few chemicals we identified while leaving others unchecked.

The Trump administration has gone louder, threatening to designate cartels as terrorist organizations, floating military action in Mexico, and authorizing lethal strikes against suspected traffickers at sea. The President’s 20 percent tariff on Chinese goods is a more serious attempt to impose costs on Beijing for its inaction — and signals that the United States is finally willing to absorb economic pain to compel Chinese cooperation. But broad tariffs are still too crude an instrument to change the behavior of China’s chemical sector. A blanket penalty hits legitimate exporters alongside bad actors, fails to distinguish between compliant and non-compliant firms, and gives Beijing little incentive to police its own industry rather than simply pass costs onto consumers.

Both administrations have struggled to change Beijing’s basic calculus: Why incur costs, crater a profitable industry, and absorb domestic backlash just to save American lives? The answer is not a doubled or quadrupled tariff. It is building a system where compliance is the cheapest path and evasion is ruinous. That means five things:

First, no paperwork, no trade. Require that all shipments of fentanyl precursors entering the United States or its immediate trading partners carry 1) a valid pre-export notification (PEN) filed through the International Narcotics Control Board; and 2) a verifiable batch identifier, such as QR code or RFID-linked ledger, traceable to the point of synthesis. Without them, banks refuse the wire, insurers cancel coverage, and carriers won’t load the container. We don’t need Beijing’s proactive buy-in to start enforcing this, ourselves. We just need to make the global logistics system treat un-notified chemistry as radioactive.

Second, choke the money. The small Chinese banks and payment processors moving cartel funds should face the same treatment we once applied to Iran’s financial system: cut off from dollar clearing until they certify a whitelist of legitimate exporters. Under Section 311 of the PATRIOT Act, the United States could treat unregulated Chinese banks and payment processors moving fentanyl-related funds as primary money laundering concerns. Beijing can shrug off sanctions on shell companies, but it cannot ignore the risk of banks losing access to the dollar.

Third, force the carriers to police their own cargo. Amend U.S. Customs and Border Protection regulations and segments of the Shipping Act to impose strict liability on ocean and air carriers that haul unverified precursor shipments into North America — with a safe harbor if they demand paperwork at booking and share it with customs authorities. Shippers won’t argue with compliance when Maersk and COSCO refuse to move their freight.

Fourth, weaponize America’s own health market. Direct HHS, DoD, VA, and CMS to exclude pharmaceutical products whose supply chains include unverified Chinese chemical suppliers from federal procurement eligibility. Beijing may not care about abstract sanctions. It will care when Chinese exporters lose the single largest healthcare buyer on earth.

Finally, lock the back door. Mexico cannot remain the pressure valve. A USMCA side-letter should impose the same paperwork and importer checks at Mexican and Canadian ports, with snap-back penalties for violations. Otherwise every safeguard we build risks transshipping through Manzanillo.

Today Chinese firms profit by looking the other way. Taken collectively, these steps could flip the incentive structure — ensuring profits flow only to those who prove their chemistry is clean, while evasion becomes a commercial nightmare to navigate. That is our best chance of compelling cooperation from a regime that will never offer it freely.

The Price of Victory

Here’s what victory in a war with an abstract noun actually costs: About $50 billion in pharmaceutical trade disruption as we force China to implement real controls, months of supply chain chaos as companies scramble to get verified, and certainly higher prices for everything from antibiotics to electronics as Chinese companies pass compliance costs to consumers.

Victory means accepting that China will retaliate — probably against our agricultural exports, and possibly against rare earth magnets or other industries. It means having the strategic patience to endure that retaliation without blinking, and explaining to voters why their prescription drugs cost more and their electronics arrive later — all to save 75,000 strangers they’ll never meet.

During the Cold War, we paid such prices routinely. We subsidized industries, restricted trade, and accepted higher consumer costs to prevent Soviet dominance and protect our way of life. We understood that strategic competition required economic sacrifice.

The fentanyl question is not merely a test of American enforcement prowess or medical compassion. It is a test of whether we still possess the state capacity and political will to impose our preferences on hostile powers. Can we create incentive structures that compel Chinese compliance? Can we absorb economic retaliation without capitulating? Can we maintain strategic focus through multiple election cycles?

China is betting we can’t. They are betting we’ll choose cheap antibiotics over American lives, economic convenience over strategic imperative, and short-term profits over long-term survival. They’re betting that our political system, optimized for diffusing responsibility and avoiding hard choices, cannot sustain the pressure required to change their behavior. And so far, they’ve been right.

Precursor chemicals sitting in DEA warehouses in Houston are evidence of our failure, not our success. Until we’re willing to impose costs that actually change Chinese chemical companies’ behavior, we can’t claim to be fighting a war against fentanyl. We’re managing our decline, one overdose at a time.

Ask any think tank fellow or cable news pundit about U.S.-China competition, and they’ll rattle off the familiar catechism: semiconductors, critical minerals, military bases in the South China Sea. The contest, we are told, is about technological superiority, economic leverage, and regional spheres of influence — the traditional tools of great power rivalry.

But that’s not what we’re competing for. These are the instruments of power, not its purpose. And it should disturb us greatly that Washington has become so fixated on how to compete, it’s forgotten why.

The real contest is over meaning: What kind of life is worth building? What kind of society deserves to endure?

That question — what are we for — is no philosophical ornament. It is our strategic imperative. Because for all the talk about “great-power competition,” neither the United States nor China is competing for territory or even resources. They are competing to define the organizational logic of the future: the frameworks through which people live, work, believe, and obey.

Beijing’s promise is explicit. The Chinese Communist Party does not pretend to value individual freedom — it values order, continuity, and growth. Its vision is not Marxist in any meaningful sense, nor is it capitalist in the way we understand the term. It is techno-administrative: a vision of social harmony imposed by hierarchy, optimized by machine. It is a model where AI predicts behavior, loyalty unlocks mobility, and legitimacy flows not from consent, but from performance. This is what Beijing is offering the world — and increasingly, the world is buying.

Washington’s offer, by contrast, is disjointed. Its institutions are unsure whether to frame the competition as ideological, technological, economic, or moral. Biden talked about defending democracy; Trump is seized with restoring sovereignty. Both have avoided the uncomfortable understanding that American influence no longer sells itself — and that without a renewed national theory of purpose, America is not offering a model so much as exporting entropy.

The United States cannot out-compete China without out-believing it. It is fantasy to think that, with high enough tariffs or strong enough alliances, we can win a contest of systems without ever declaring what kind of system we stand for.

But this isn’t a Cold War redux; the world is not deciding between capitalism and communism. This time, Sino-American rivalry is about something messier and more metaphysical:

It is the contest between the dignity of the individual and the seduction of the machine.

Beijing’s Endgame

Beijing has an answer to the future, and it is terrifying in its coherence.

The goal is not just national rejuvenation. It is global legitimacy — to reframe modernity itself as a Chinese-led enterprise.

China’s vision is one of collective prosperity through technocratic management. The Chinese Communist Party promises its people — and increasingly, the world — that expert administration, technological optimization, and social stability can deliver material abundance and national pride. It’s a seductive proposition: surrender the messy uncertainties of democratic deliberation in exchange for competent governance and rising living standards. Why endure the chaos of American-style democracy when the CCP can deliver high-speed rail, eliminate extreme poverty, and build gleaming megacities in record time?

But in Xi Jinping’s hands, “development” is not a neutral process. It is a civilizational template, exported through fiber-optic cables, party-to-party trainings, and surveillance technologies bundled as infrastructure. The end state is what Singapore flirts with and what the Gulf monarchies have perfected: the efficient autocracy, turbocharged by automation. A regime that can suppress dissent not with guns, but with dashboards — not by silencing the public, but by predicting and preempting what they will do.

If America’s founding impulse was liberty before order, China’s is order before everything — and it now has the tools to enforce that priority at scale.

And crucially, Beijing believes it will prevail in this contest of systems without firing a shot. In its eyes, American decadence is not a propaganda tool but an empirical fact. Our Congress cannot pass a budget. American cities cannot keep the lights on. Trust in government is at historic lows, civil unrest is at record highs, and institutions rot under the weight of performative governance.

The longer the United States debates itself, the more China gets to define the baseline conditions of what it means to be a “modern” and “moderately prosperous” country — and what it means for a person to live in one. That is the competition: not for land, or even GDP, but for the authority to shape the compact between human beings, their technologies, and their governments.

America’s Strategic Confusion

For all its resources, America lacks a theory of the competition it’s in.

The Trump administration frames the China challenge as economic — a zero-sum race for jobs, factories, and trade balances. The Biden administration rebranded it as a contest between democracies and autocracies, then immediately undercut that premise by begging Riyadh for oil and giving Modi a standing ovation in Congress. Neither side has articulated what, exactly, the United States wants the world to look like when this is over — only that we should keep China from shaping it.

The American worldview is defined by the principles of individual agency and the right to self-determination. Even when our democracy fails — and it often does — we’ve maintained that there’s something valuable about the right to choose your own leaders, speak your mind, and pursue happiness as you define it.

This vision powered our soft power for decades, inspiring dissidents from Beijing to Havana, and propelling our status as a shining city upon a hill. But there is an uncomfortable truth that few in Washington want to acknowledge: the American Idea is losing its appeal, even among Americans themselves.

The Populist Cry for Meaning

The rise of the Tech Right — the loose coalition of venture capitalists and Silicon Valley refugees who helped elect President Trump — is often misunderstood as a simple embrace of accelerationism. Look closer, and you’ll find something more complex: a desperate search for purpose in an age of technological displacement.

When Marc Andreessen rails against the existential threat of Chinese AI supremacy, he’s not just worried about market share or military capabilities. He's articulating a fear that America is losing the plot — that we have become so obsessed with managing decline that we’ve forgotten how to dream big. When Elon Musk promises to make life “multiplanetary,” he’s offering something the Chinese system cannot: a vision of human agency that transcends earthly limitations.

The populism of the Tech Right is not necessarily grounded in optimism about technology. It is rooted in a hunger for dignity — the dignity that comes from believing your civilization stands for something that matters. The Tech Right looks at China’s relentless efficiency and feels not admiration but existential terror: What if they’re right? What if democratic chaos really is inferior to technocratic competence?

The irony is that this anxiety has driven many in Washington and San Francisco toward an essentially Chinese response: the belief that America can and must “win” through superior technology and industrial policy. Many are today embracing a kind of techno-nationalism that mirrors Beijing’s own approach, complete with massive state subsidies, non-tariff barriers to trade, and five-year plans dressed up as industrial strategy.

For now, the DC-SF consensus is right: Some form of industrial policy is necessary to compete — and undoubtedly effective at amassing power in the industries that matter most. But in the grand scheme of protracted competition with China, even a reindustrialized and abundant America will struggle to answer the same question that haunts every venture capital pitch and product launch:

What is all of this innovation actually for?

The Retreat Into Ourselves

There is another faction that has gained ground as America lost its way. The so-called “Restrainers” — voices from Quincy, Cato, and beyond — who argue that America should accept the limits of its power and shed the burdens that come with global leadership.

The isolationist revival offers its own response to American anxiety: Stop trying to manage the world and focus on problems at home. Why spend billions on foreign adventurism when we can’t fix our own infrastructure? Why worry about Chinese influence when American families are struggling to make ends meet? The logic is seductive — America has overextended itself, and the solution is strategic withdrawal.

The Restrainers are right about one thing: the era of American primacy through military intervention is over. The wars in Iraq and Afghanistan proved that democracy cannot be imposed by force. But their proposed solution — a wholesale retreat from global leadership, an insistence that our values are irrelevant to our foreign policy, and a seemingly gleeful embrace of naked realpolitik — doesn’t just misunderstand the nature of the current competition.

It risks the unmaking of America’s identity, and the very source of its power.

The Myth That Moves Mountains

For all their differences, each of the major factions on the rise in America today — China Hawks, Restrainers, Abundance Dems, and the Tech Right — share a common blind spot: They have forgotten what made this country powerful in the first place.

America’s greatest strategic asset has never been its technology or military hardware. It has been the myth of American exceptionalism itself.

I don’t mean “myth” as falsehood, but a story we choose to live by. The belief that America is good. That it represents something unique in human history, that we are a nation founded on an idea rather than blood and soil. It is an ethos born of great men who made hard sacrifices in defense of abstract values and faraway peoples — out of a desire to make their country, and the world, a better place.

The legions of those who subscribe to the myth of American exceptionalism — the diplomats posted to dangerous corners of the world, the soldiers who volunteer for multiple deployments, the scientists who choose public service over private wealth — have done more to advance American interests than any strategic investment, weapons platform, or technological breakthrough ever could.

The American Idea has powered everything from the Marshall Plan to the internet, from the space program to the civil rights movement. It convinced generations of immigrants to uproot their lives for the promise of American opportunity. It did not promise comfort or certainty — only the chance to live as authors of one’s own life. And for millions, that was enough.

But myths are fragile things. They require constant tending — and when they are abandoned by their own believers, they die.

What We're Really Fighting For

China is offering the world a different myth: prosperity without the burden of democratic responsibility. Its story is a compelling one, especially for developing nations watching American democracy tear itself apart.

America’s counter-narrative has become defensive and reactive. We have defined ourselves primarily in opposition to China rather than in affirmation of our own values. Our “strategic competition” has devolved into a desperate attempt to maintain technological and military superiority, rather than demonstrating why individual liberty and democratic governance produce outcomes better for human flourishing.

This is backwards. China’s greatest vulnerability is not its dependence on imported semiconductors or its demographic decline — it’s the spiritual emptiness at the heart of its development model. For all its material successes, the CCP cannot offer its people a satisfying answer to the question: What is the point of all this efficiency?

The Chinese system can deliver prosperity, but it cannot deliver meaning. It can create wealth, but it cannot create the agency that allows people to find their own purpose. It can build cities, but it cannot build the kind of civic culture that makes those cities worth living in.

If America wants to “win” competition with China, we need to remember what we are competing for: the right to define what human dignity looks like in the modern world.

This means investing not just in strategic technologies, but in the institutions and ideas that make democratic self-governance possible. It means demonstrating through our actions — not just our rhetoric — that free societies can address collective challenges without sacrificing individual rights. It means showing the world that democratic chaos is not a bug to be optimized out of existence, but the irreducible condition of human freedom.

A Vision of Victory

But what does victory actually look like? How will we know if we’ve won?

The honest answer is that we probably can’t “win” in any definitive sense. China is not going away. The Chinese Communist Party is not going to liberalize itself out of existence. And any strategy premised on regime change in Beijing would be as unrealistic as it would be dangerous.

Instead, victory looks more like resilience — the ability to reinvigorate our own model while preventing China’s from becoming the global default.

We will have succeeded if, in 2050, young people around the world still see democratic societies as places they want to live, work, and raise families. If developing nations still view American-style institutions as worth emulating, even when Chinese alternatives offer faster material gains and cheaper dopamine.

We will have succeeded if we can demonstrate that free societies can solve collective problems — technological disruption, natural disaster, and inequality — without sacrificing the individual liberty that makes those societies worth preserving in the first place.

We will have succeeded if we can offer Americans a reason to believe that their civilization is worth preserving and extending — and rekindle our vanishing source of national pride.

This competition is not about converting China to our way of thinking. It is about proving that our way of thinking still works. That democratic governance, for all its inefficiencies and frustrations, produces better outcomes for human flourishing than technocratic authoritarianism.

This is both a more modest and more difficult goal than regime change. It requires us to actually solve our own problems rather than simply pointing to China’s. It means making democracy work well enough that people choose it freely, not because we’ve eliminated the alternatives.

The Path Forward

The United States is in the process of losing strategic competition with China. It is losing not because China’s system is more compelling, but because we’ve ceased making the case for our own.

Both recent administrations have misunderstood the nature of this competition. Biden framed it as a technical problem to be managed through export controls and economic alliances — a “small yard, high fence” strategy that suggests America’s best hope is slowing China down. Trump is mimicking parts of China’s own playbook: aligning politics with capital, erecting barriers to trade, and prioritizing government efficiency at the expense of democratic values.

Neither approach addresses the deeper challenge: a competition not only for power, but meaning.

If America still wants to lead, it has to inspire. That will require moving from a strategy of denial to one of demonstration — not just blocking China’s model, but proving that ours still works.

The exact policies that might help us prevail are not yet clear. But cornerstones of the American Model should include:

• Competence at home. Global trust in the American system begins with domestic proof of concept. A democracy that cannot govern itself will not convince others to follow its lead. We must fix the basics: infrastructure that functions, agencies that execute with integrity, and a political process that rewards responsibility over spectacle.

• A bet on people, not just production. America’s edge has always come from human capital — individuals free to think, build, dissent, and dream. Investing in education, talent mobility, and open research ecosystems will do more to secure our future than any subsidy package ever could.

• Democracy that delivers. The Chinese model tempts with order and output. Ours must answer with innovation and agency. If ordinary Americans cannot feel democracy working in their lives — improving schools, lowering costs, making housing attainable — we should not be surprised when others choose authoritarian efficiency.

• Technology that liberates. Our tech industry’s greatest advantage isn’t its unrivaled access to computer chips or the depth of its capital markets. It is the freedom to build. While China designs systems to predict and control, we must develop technologies that empower individuals over institutions. From encryption that safeguards privacy to platforms that protect dissent, American technology should reflect the principle that people, not algorithms, control their own destinies.

Ultimately, the United States does not need to beat China at being China. We need to be visibly, unapologetically good at being ourselves.

This competition will not be won with chip fabs or carrier strike groups alone. It will be decided by the people — in Manila and Nairobi, Delhi and São Paulo — who are choosing between two visions of how society can work and what a human life is for.

If we can offer a model that respects their dignity, expands their agency, and gives them something to believe in, we won’t need to fear China’s rise. We will have earned our role in shaping the future — not by dominating the world, but by inspiring it.

Ten days ago, I started this newsletter with the modest hope that a handful of China watchers might find value in my occasional dispatches from the trenches of strategic competition. Today, 200 of you have signed up — including four sitting Ambassadors who apparently think there's something in here worth reading.

Your enthusiasm has convinced me it's time to give this project a name that reflects its broader ambition:

Choosing Victory.

It turns out there are only so many names that evoke choice amid competition… “Decision Points” and “Hard Choices” were already taken.

In Choosing Victory, Beltway natives will see an obvious link to the American Enterprise Institute's 2007 Iraq Study. That report, written as sectarian violence consumed Baghdad, argued that the United States could not afford to accept defeat in a war it had chosen to fight.

But this is not 2007, and China is not Iraq. The stakes today are higher, the timeline longer, and the consequences of miscalculation even greater. Where the Iraq Study addressed a war of choice that had already gone sideways, the United States today faces a competition that will define the next half-century of global order — with profound consequences for generations of Americans.

In 2025, Choosing Victory is not about fixing yesterday's mistakes; it is about making tomorrow's right decisions for the right reasons. Choosing victory demands articulating a sensible vision of American leadership in the world — one that each of us is able to take pride in after decades trapped in the vocabulary of managed decline.

This newsletter will be a space dedicated to thinking seriously about the stakes of U.S.-China competition, defining a coherent theory of victory, and exploring the difficult choices that will contribute to our success or failure.

Every week, you can expect deep-dives on the decision points shaping U.S.-China rivalry: the technology controls that will sculpt the future of the global economy, the alliance structures that will anchor global stability, and the military capabilities that will preserve peace in the Pacific. Occasionally, I'll venture beyond the bilateral relationship to examine the nature of diplomacy, strategy, and the architecture of global power.

Thanks for joining me on this journey. The task is enormous, but the stakes demand nothing less than our best effort.

— Ryan

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Editor’s Note (June 22, 2025): In light of last night’s strike on Iranian nuclear facilities, this essay — written before the operation — feels unexpectedly timely. It explores how states interpret conflict, and the role of trust in managing perceptions between rival powers.

In Plato’s Allegory of the Cave, statues are ferried past a fire by anonymous “carriers” — their shadows mistaken for reality by those chained to a wall. Plato neglects to comment on the source of these figurines; we are left to speculate about who might have carved them, or from what.

But in foreign policy, truth arrives shaped — hewn from chaos by diplomats and intelligence services, then lit from behind to cast legible silhouettes for their principals to act on.

Imagine, for a moment, Plato’s cave under siege by a hostile tribe. Rocks are constantly falling into the open mouth of the cavern. Some are thrown deliberately by the assailants as weapons, while others fall into the chasm from erosion and natural disaster.

Here a state’s diplomatic and intelligence services are not mere puppeteers of shadows on a limestone wall — they are stonemasons tasked with sorting through the rubble and selecting rocks to carve into the statues that cast them.

The stonemasons do not have perfect information, and they are not a monolith. Some are particularly talented at carving, while others specialize in geological science. They may debate amongst themselves which rocks are worth carving, and how fearsome an idol to sculpt from each.

A bold few may venture outside the cave to speak directly with their assailants. They may ask, “Why did you throw that rock?” and attempt to persuade their aggressors to stop. They may warn of unintended consequences, or threaten retaliation after a particularly large barrage.

Upon their return to the cave, these envoys will inform the selection and sculpting of the day’s stones. Based on their interactions with the enemy, they may draw attention to some new boulders, or encourage their fellow masons to pay less mind to others.

The risk is that these diplomats, enamored with interpersonal understanding, might be tempted to explain away deliberate provocation. Perhaps they understand rock hurling to be an immutable part of their adversary’s culture; perhaps out of strategic empathy they recast aggression as “self-defense.” In any case, their carvings often soften the contours of real threats — sometimes dangerously so.

The security services, on the other hand, are trained in distrust, and risk miscalculating if they isolate signals from context. They are prone to carving grotesque idols from unremarkable stones, inferring malicious design from random noise. They rely on diplomats to provide necessary context and rightsize their paranoia.

The debate among these two factions of stonemasons is the crucible that molds great power politics. Diplomacy exists to inform this concert within one’s own political system — and to influence it in others.

Assuming the Worst

Every cave is damp with the air of conspiratorial thinking and misjudgment.

The world caught a glimpse of this in the run-up to the 2020 U.S. presidential election — when leaders in the Chinese People’s Liberation Army had convinced themselves that the Trump administration would deliberately provoke an armed conflict with China for some imagined electoral gain.

Such speculation had no basis in reality. The shadows witnessed by PLA leaders were the product of monstrous, inaccurate idols concocted by China’s own security services. And yet they were real enough to prompt the U.S. Chairman of the Joint Chiefs of Staff to reach out and defuse the situation.

The October-surprise-that-wasn’t is an extreme example of threat inflation, but not an isolated one. Certainly across my own hundreds of conversations with Chinese diplomats, I have been asked questions that betray a deep misunderstanding of America’s interests and political system — and made me fear what kind of idols are being carved in the caves at Yan'an.

Idealists go wrong in assuming trust can override this dynamic. It can’t — and it shouldn’t.

Responsible policymakers must assume that every rock is thrown intentionally, and that more will follow. It is generally less costly for the stonemasons in any political system to mistake a pebble for a boulder, and for their principals to cower at its towering shadow, than to overlook an acute threat. This is especially true in a state gripped by nationalist panic — doubly so for a democracy that holds decisionmakers accountable for perceived weakness.

The default state of great power rivalry is one of structural distrust. Although we may wish it were not so, states are largely confined to operate within the two squares of a prisoner’s dilemma that assume betrayal. Effective strategy demands subscribing to the least charitable interpretation of an adversary’s behavior, even at the risk of distortion and threat inflation.

Balancing Deterrence and Reassurance

Still, one of diplomacy’s core functions is to actively shape how an adversary perceives the stones hurled in its direction — illuminating them from different angles as circumstances require.

Sometimes states have an interest in cultivating and exploiting misjudgment. Their diplomats might strike a threatening tone, and attempt to portray their arsenal of rocks as larger or more formidable — thereby scaring a rival’s leadership. Some level of misunderstanding is helpful in compelling cooperation and deterring aggression. But it is also this brand of diplomacy that undergirds the Madman Theory of geopolitics and gives rise to brinksmanship.

More often, a state’s diplomats seek to minimize and make excuses for the rocks hurled by its own warriors — to reduce the chance of retaliation, and get away with hurling more. They might disclaim responsibility for some stones clearly thrown in earnest; or explain them away through whataboutism and victim-blaming. Goodwill exists to paper over the most nettlesome boulders — to buy time, excuses, or deniability.

Finally, there are times when states have an interest in correcting genuine misperceptions — clarifying that a rock was not thrown, but fell accidentally into the mouth of the cave. The October-surprise-that-wasn’t joins a long tradition of crises conjured from paranoia. (Stranger still are those rare occasions when dueling clans share an interest in denying a particular stone was cast at all).

Trust is most valuable in this last mission: helping diplomats from rival tribes adjudicate between run-of-the-mill gaslighting and earnest attempts to clarify a potentially dangerous situation.

Such trust isn't born of goodwill, but learned through painstaking repetition. Over time, rival masons are able to read the difference between rocks hurled deliberately and those that simply tumble into the cave through accident or incompetence — and when their counterparts are being truthful about which is which.

Influencing the Rival Concert

The small band of stonemasons tasked with venturing beyond their cave does not engage a unified adversary. They engage only one faction — often the least empowered — of their counterparts in a rival clan. Typically this means a foreign ministry tasked not with shaping internal consensus, but with managing external impressions.

This is especially true for China, where foreign-facing diplomats, technocrats, and scholars are often dismissed as “barbarian handlers” — intermediaries meant to absorb foreign sentiment and repeat Party-approved narratives, not to steer deliberations within the PLA or Politburo.

Yet even a disempowered counterparty can serve as a window into the rival cavern. Diplomacy is not always about extracting commitments. It is often an exercise in inference — studying how a rival’s stonemasons will interpret the rocks hurled their way, and subtly steering their internal debate.

Skilled envoys may seek to preempt the worst instincts of a rival’s security services. They may proactively justify their decision to cast a certain stone — or, just as critically, explain what is not being done — to help disarm suspicion or stall escalation.

At times, diplomats even weaponize the internal dynamics of their own systems. They may present themselves as the rational faction within a contested policy process: Work with us while you can. Others are less patient, less predictable, and harder to persuade. The implied threat is that a failure to cooperate risks empowering those who see no value in cooperation at all.

This isn’t always a bluff. In systems gripped by paranoia, even minor diplomatic slights can tip the balance toward escalation. Here, too, trust plays a role in helping diplomats discern which signals can be safely ignored, and which demand careful calibration. Misjudging this can mean negotiating against one’s own interests on the one hand, or alienating the few remaining allies of pragmatism on the other.

Between great powers, diplomacy is rarely a negotiation between coherent states. It is an effort to shape the conversation unfolding inside a rival’s walls — not merely to project intent, but to guide the chisels of another clan.

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Six days before he was sworn in as National Security Adviser, Michael Waltz took center stage at an unlikely venue: The U.S. Institute of Peace had convened 18 foreign policy luminaries from four presidential administrations. The occasion — a symposium titled “Pass the Baton: Securing America’s Future in an Era of Strategic Competition” — was meant to enshrine continuity in U.S. foreign policy, and culminated in a literal baton exchange with outgoing National Security Adviser Jake Sullivan.

U.S.-China tech competition dominated more than half of the conversation. Asked which elements of the bipartisan “China Consensus” President Trump would seek to maintain, Waltz cited the need to promote and protect American technology, and to reshore critical mineral and pharmaceutical supply chains. “The Chinese really need our markets,” he said. “We’re going to use the leverage we have with them while we still can.”

Six months into President Trump’s second term, a good portion of U.S. policy toward China has remained business-as-usual. The Commerce Department has issued a steady drumbeat of rules controlling the export of critical technologies. The Treasury continues to sanction firms responsible for abusing human rights in Xinjiang and Hong Kong. And as Waltz promised during the event, the White House has remained laser-focused on freeing America from its dependence on Chinese supply chains, to put the issue mildly.

But it would be an understatement to say that some things have changed in the U.S.-China relationship. For starters, the National Security Adviser was fired along with nearly all of his staff. Tariffs have torn the world trading system asunder. Funding for U.S. scientific research, foreign aid, and global media has been gutted.

Technology policy — long a bright spot in the bipartisan China Consensus — has not been spared from the chaos. On the contrary, the Biden administration’s “small yard, high fence” approach to technology competition is beginning to fall out of fashion, while President Trump’s approach to trade negotiation, AI competition, and energy deals in the Middle East have laid the cornerstones of his emerging foreign policy doctrine.

What delicate consensus remains is showing signs of terminal failure. And over the next four years, it will likely continue to fracture along three dimensions:

1. Should we hoard frontier capabilities, or nurture customers in a global market?

Technology is both a capability and a commodity. The Biden administration viewed AI primarily as the former — and so focused on winning a vertical race to unlock new abilities in an unfolding tech tree. The Trump administration views it much more as the latter — and is focused on winning a horizontal race to sell American AI services (and underlying hardware) in global markets.

The Biden administration’s decision to ban the sale of leading-edge AI chips to China was a calculated, unpopular gamble. At the risk of kneecapping billions in revenue for some of its most important tech companies, the United States would shutter its single most valuable export market. It did so on the chance that chips would become for China in the 2020s what fissile material production was for the Soviet Union in the 1940s: a significant but ultimately surmountable bottleneck in the tech stack of the century.

The gamble paid off as AI scaling laws held and LLMs became profoundly capable. Leading Chinese AI labs resorted to stockpiling and smuggling NVIDIA chipsets to keep up. The Chinese government spent hundreds of billions of dollars trying to solve the problem, and got scammed out of billions more. Huawei suffered delays and poor yields in both its Kirin and Ascend chip production lines. Though the Biden rules were not enough to prevent the wholesale emergence of a Chinese AI industry, they did succeed in introducing friction in a protracted competition to build bigger, better language models, and the chips used to train and operate them.

In 2025, the Trump administration faces a very different challenge, and has struck its own gamble accordingly.

Chinese open-weight language models are now globally competitive. Between January and April, DeepSeek’s user base grew four-fold, to 100 million monthly active users (ChatGPT has 400 million). Its latest release, R1-0528, beats Google’s Gemini-2.5 at some tasks and nearly eclipses ChatGPT-o3 at others.

Though it still faces limited production capacity, Huawei’s chips are getting there, too. Last week, Commerce Secretary Lutnick testified that Huawei is slated to produce 200,000 advanced chips this year. The Wall Street Journal puts the number closer to 800,000. (NVIDIA makes that many Blackwells each quarter).

Many in the administration remember the painful march of Huawei’s 5G base stations that dominated their first time on the merry-go-round. With no international competitor able to match its price point, Huawei became a major telecom equipment provider in 170 countries.

The Trump administration is determined not to repeat this mistake. The global market for AI services is too important to risk ceding to DeepSeek and Qwen. This time, the United States has national champions to promote. This time, their products are actually worth buying. So, the logic goes, it is worth paying some price to “lock-in” American vendors as the preferred partners of choice across a number of growing and interrelated industries: AI services, complete chipsets, and the semiconductor manufacturing equipment (SME) and electronic design automation (EDA) tools used to build them.

It was this calculation that prompted the President to allow the sale of 500,000 leading-edge, NVIDIA-designed GPUs to the United Arab Emirates, and 18,000 to Saudi Arabia, at the expense of similar build-outs in the United States. Sure, the United States will also receive $2 trillion in reciprocal investment commitments, energy guarantees, and closer ties with the Gulf. But the bottom line is that each of the 518,000 chips greenlit for sale abroad — basically a full calendar quarter’s worth of production — will not be installed in American datacenters, despite overwhelming demand.

The question at the heart of the Middle East deals is whether the long-term payoff of wooing fence-sitting partners will be worth the short-term hit to domestic innovation (and an expanded, potentially more permissive attack surface for would-be hackers and smugglers).

It’s too early to tell whether the gamble is a good one. The deals have been criticized in equal measure by China hawks, human rights groups, Abundance Dems, and the Tech Right. With an inferior product and less than a quarter of NVIDIA’s share of production capacity, Huawei’s chips are a paper tiger, they say. Another data point in late May seemed to vindicate their derision, when a much-hyped Huawei data center in Malaysia turned out to be built on a single, rather unimpressive cluster of just 3,000 GPUs.

Whether President Trump’s Gulf gambit succeeds or fails, the United States has learned something by recalibrating its chip exports: In 2025, emerging technology is a seller’s market.

As it considers rationing and auctioning off additional tranches of its coveted compute production, the United States can afford to be discerning with potential buyers. It can demand they erect export control regimes, physical access control systems, enhanced cybersecurity measures, and terminate wholly unrelated contracts with Chinese competitors — in addition to forking over hundreds of billions of dollars in advance market commitments. The Trump team may very well be right in its assumption that America can move faster and extract more by picking partners case by case, unburdened by what has been.

2. What costs are we willing to bear in the name of constraining China’s technology development?

Both Chinese propagandists and U.S. technology lobbyists are keen to point out that excessive regulation harms American innovation by undercutting profits and therefore R&D budgets. Still the role of government is to price an intangible good — national security — and mitigate against externalities the market might open against itself.

In a protracted competition between superpowers, the question of whether to restrict the export of a given technology is a straightforward cost-benefit calculation: Will the long-term costs imposed on Chinese buyers outweigh the loss of revenue to American firms who would have sold to them?

In theory this tradeoff is measurable. In 2021, CSET colleagues and I looked into American chip companies’ SEC filings. If the U.S. government were to crack down on high-end chip sales to China, we estimated they stood to lose about $5 billion — a hefty sum, but not irreplaceable if the state could find ways to compensate.

The Biden administration attempted to address this by pairing hefty industrial subsidies in the CHIPS and Science Act with tightly-scoped controls on high-end chips, which were likely to affect a comparatively small portion of revenue.

But the balance between economic sadism and masochism is much easier struck in theory than practice. The Biden team eventually broadened its export controls as both American and Chinese corporates managed to conjure endless loopholes. But it did not have the stomach to act decisively, in ways that risked lasting damage to both the U.S. and Chinese economies. Lobbyists complained of burdensome compliance costs while downplaying the effects in public earnings calls, subsidies fell prey to sociopolitical rent seeking, and subsequent “clean-up” rules suffered delayed and uneven implementation.

The Trump administration has proven resilient — maybe even impervious — to the wails of American and Chinese industry, though it does face similar pressure and much higher stakes. In addition to export controls, tariffs are the favorite instrument of imposing cost. And so, with loaded guns aimed at a dozen essential supply chains, the world learned this week exactly how much pain Washington and Beijing are capable of tolerating in a protracted standoff.

For their part, President Trump’s trade negotiators have been following the same playbook he wrote in 1987: manufacture leverage and apply it for maximum effect. The Commerce Department had taken six major export enforcement actions since Liberation Day. Some were transparent efforts to build leverage and easily reversed, while others were meaningful steps in a long-running campaign to keep America’s edge in critical technologies:

1. Banning the sale of certain U.S. AI chips: On April 15, NVIDIA received an “is-informed” letter for H20 chips and any other circuits with similar performance to China, Hong Kong, and Macau.

2. Imposing penalties for purchasing Chinese AI chips: On May 13, BIS issued guidance notifying industry of the compliance risks of using specific Huawei Ascend chips, which were likely developed or produced in violation of U.S. export controls.

3. Banning the sale of EDA software: Beginning May 23, Siemens, Cadence, Synopsys, and other providers of electronic design automation software received “is-informed” letters for their exports to China, Hong Kong, and Macau.

4. Banning the sale of aircraft engines: On May 28, CFM International and General Electric received “is-informed” letters for Leap-1C and CF34-10A engine exports to China, Hong Kong, and Macau.

5. Banning the sale of chemicals: On June 3, Enterprise Products Partners and Energy Transfer received “is-informed” letters for butane and ethane exports to China, Hong Kong, and Macau.

6. Banning the sale of nuclear reactor components: On June 6, Emerson and Westinghouse received “is-informed” letters for exports of components used in AP1000 reactors to China, Hong Kong, and Macau.

With the dust now settled in London, it’s possible to derive a scorecard.

Chemicals, aircraft engines, and nuclear reactor components were always going to be easy gets for Beijing. Like rare earths for the United States, these commodities strike at the heart of China’s economic development. Offering some guarantee of their continued sale was sufficient to secure Chinese buy-in, as they were — literally — the nuclear option.

Not every analyst will agree, but I believe EDA software sits in a different category. China’s champions in logic (Huawei) and memory (YMTC, CXMT) chips are wholly reliant on the continued provision of Western EDA tools. The Commerce Department’s willingness to go after these licenses was a meaningful next step in the contest for chip supremacy. That the United States walked it back was not necessarily surprising — but I expect this won’t be the last we’ll hear on EDA.

Finally, the Trump administration was clear going into the negotiation that it would not backtrack on its decision to restrict the sale of NVIDIA’s H20 chips into China, nor allow the purchase of Huawei Ascend chips abroad. Backpedaling on either measure would have indicated the administration was in a real rush to stabilize the trade relationship — and invited questions about what else might be up for renegotiation.

All told, Secretary Lutnick, Secretary Bessent, and Ambassador Greer left London with a trade deal that advanced the President’s policy objectives and did not reverse any core American interest. But as it braces for a rematch before December, the Trump administration will need to take drastic steps to minimize U.S. exposure to Chinese rare earth elements, magnets, pharmaceuticals, and lithium-ion batteries if it wants to keep up. Longstanding allies (Japan, South Korea, and Australia) and emerging partners (India and Vietnam) are well positioned to provide a stopgap in these exact industries — provided we don’t blow up those bilateral relationships.

3. Should our objective be “domination” in critical technologies, or merely self-sufficiency — and what is the price we are willing to pay to achieve it?

For 25 years American foreign policy elites have debated whether this country should make necessary investments to remain the dominant global power (primacy), offload the cost to allies and partners (offshore balancing), or accept the limits of American power and settle for less (restraint).

On many issues of American foreign policy today, the “restrainers” are in the divers seat. The United States has worked assiduously to shed burdensome international commitments. Secretary Rubio has not been shy about discussing the limits of American power.

And, faced with the reality that America’s edge in physics, biology, and materials science died with its manufacturing industry, some in Washington are beginning to understand this dilemma now applies to economic and technological competition with China.

The United States cannot — and currently does not — lead the world in every class of emerging technology. We are doing pretty well where it counts: in chips and AI. We are in the process of losing our lead in aerospace, biotechnology, and quantum computing. And we are woefully behind in batteries, robotics, drones, electric vehicles, 5G, and photovoltaic cells.

Reversing course in every one of these industries would require extraordinary investment, to the tune of trillions of dollars. It would probably also require making peace with our research institutions and admitting a good number of highly skilled immigrants.

The United States is not prepared to make these investments, politically or financially. The President and many Republicans decry rampant waste in the Biden team’s $40 billion chip subsidy passed in 2022. But since then, China has pumped another $50 billion into its own chip industry, launched a $140 billion fund for robotics, and built an $8 billion space station. (They also landed on the dark side of the moon, just for fun).

To be sure, there are many levers we can pull to improve the competitiveness of American companies in global markets, and to accelerate innovation at home. But the first and most essential step the Trump administration can take is to make an honest and specific accounting of what we are trying to achieve — because the United States is not going to “out-China China.” It never was.

As technology competition drags on, other countries are going to buy robots, cryptography systems, and DNA sequencers made in Shenzhen, Hefei, and Hangzhou. The United States cannot run pass interference and demand a rip-and-replace campaign for every Chinese component in every country — though we will surely be tempted to try.

At some point during the next four years, America’s technology priorities will become apparent, even if they are not explicitly stated or consciously recognized. There are sectors where we must lead the world, sectors where we must maintain some minimum sovereign capacity, and sectors where we should feel comfortable passing the buck to dependable allies and partners.

Where We Must Dominate

A bold, Trumpian approach to technology competition with China would begin by clearly articulating the industries in which the United States must remain number one — not just competitive, not just present, but dominant.

The administration has been right to recognize AI and semiconductors top this list. Energy generation and batteries probably deserve to be next. Without control over superintelligence and the capabilities required to train and power it, every other domain — from biotech to space to financial markets — becomes a derivative contest. These are the technologies that shape the foundation of military power, economic leverage, and geopolitical influence.

These sectors should receive the full suite of state support: aggressive export controls, generous tax breaks, public-private partnerships, and, if necessary, industrial coordination backed up by the might of America’s defense industrial base. They are, as Xi Jinping has recognized, the high ground of 21st-century statecraft.

What We Should Delegate

For most of the aforementioned technologies where America has lost or is losing its edge, absolute dominance is no longer realistic, but strategic dependency would be dangerous. Here, the goal isn’t to lead the world in production capacity — it’s to maintain a qualitative edge at a large enough scale to survive a supply chain disruption without capitulating.

This is particularly true for technologies with military and dual-use applications: aerospace, quantum communication systems, satellite manufacturing, rare-earth and biologics processing, and advanced manufacturing robotics. These sectors don’t require U.S. national champions to hold the majority of global market share, but they do demand a minimum viable domestic base.

For some of these industries, it’s smarter to work with trusted partners — for example, by buying quantum dilution refrigerators from Finland and robotic arm subassemblies from Japan, rather than trying to replicate their technology stacks from scratch. The President would do well to follow his instinct to sign long-term, exclusive supply agreements and fund secure manufacturing nodes abroad, rather than spend billions trying to reshore entire supply chains.

What We Can Tolerate

There is a third category of technologies that no administration wants to admit exists or probably ever will: industries where America does not need to lead, does not need to produce, and frankly does not need to care — as long as it is able to depend on a diverse mixture of independent foreign suppliers, and so long as Chinese production does not threaten core American security interests.

Electric vehicles, solar panels, and even consumer-grade drones might fall into this bucket. These sectors are politically loud but strategically shallow. America has burned precious time, money, and political capital bashing China’s advances and insisting on our ability to stay relevant in the same, when we could just as easily have cemented import agreements with core allies or, in some cases, tolerated Chinese success without much material risk to the homeland.

Drawing this line is essential to keep U.S. policy coherent. Without a willingness to offload, we end up with bloated industrial strategy, incoherent diplomatic asks, and economic overreach. Success in protracted competition with China requires admitting that below the commanding heights of strategic competition, resilience — not supremacy — is the metric that matters most.

Concepts of a Plan

Six months into President Trump’s second term, the next chapter of U.S.-China technology competition is beginning to take shape. Chips and AI remain the American lodestar. The administration is taking a more muscular approach to export control. It is manufacturing trade leverage — and as we just saw in London, using it to effect.

But it would be a mistake to call this a coherent doctrine. The Trump administration has not drawn clear lines between what technologies the United States must dominate, what it can safely delegate, and what it should learn to tolerate. Instead, it has defaulted to tactical moves — some shrewd, some improvised — in a competition that increasingly demands long-term discipline.

The next four years will force choices. Not every tech stack is worth dominating. Not every ally can be taken for granted. And not every factory needs to be built on American soil.

The China tech consensus is cracking. What replaces it will depend on what costs the United States is willing to incur to lead in the industries that matter most.

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