The trade war has reshaped the global order, hastened the transition to a bipolar world, and—contrary to U.S. intentions—propelled China toward technological independence and advancement. The U.S.-China relationship will challenge many nations soon, including those that have successfully maneuvered between the two powers. The day is fast approaching, and countries must choose sides and align their policies accordingly.
Uncertainty looms over U.S.-China relations at the start of Donald Trump’s second term. Will one of the most significant conflicts of the 21st century escalate into a complete split—or even a third world war? Are we headed for an exhausting tit-for-tat trade war? Or are we on the verge of a significant deal between the superpowers? Spoiler: While it is extremely difficult—if not impossible—to predict where Trump 2.0 will lead, whether recent declarations will materialize, or if a clear trend will emerge, my humble assessment is that the direction will ultimately be business-oriented. There are still many hurdles before a win-win agreement is reached, but both sides have too much to lose if the escalation continues.
In this article, I aim to present the Chinese perspective on the conflict—a viewpoint less familiar in the West. I will argue that tariffs, mutual embargoes, and restrictions on technology exports have failed to achieve their intended goals and produced the opposite effect. While U.S. sanctions slowed China’s technological progress in the short term, in the medium and long term, they pushed China toward technological independence and new energy sources—perhaps even technological superiority.
This Time, China Holds the Leverage
From China’s perspective, President Trump’s second-term “America First” policy presents new challenges but also a significant opportunity to fulfill its goal of becoming a global superpower and leader.
Beyond the direct economic harm to the U.S. and China, the trade war has rattled global markets, driving up prices and contributing to economic recession. The modern-day “cold war” has affected everyone personally: we are paying higher prices, job markets have become more volatile, technological restrictions are being used as bargaining chips, energy and production costs are rising, and supply chain disruptions continue to plague the world.
At the start of his second term, Trump imposed cumulative tariffs of 20%. In response, China raised tariffs on agricultural products by 15% and further restricted the export of rare metals, which could disrupt the global electronics and automotive industries. Regional supply chains have gained importance as businesses seek to reduce dependence on China or the U.S., leading companies to diversify their sources of supply.
In the struggle for a new world order, China’s rapid rise as a global power is alarming to the U.S., which seeks to curb its influence. The alliance between China and Russia has strengthened in recent years as a key component of a coalition countering Western dominance, and now, the Trump administration is reshuffling the deck.
Under President Xi Jinping, China has never concealed its ambition to become the world’s most influential superpower. From its perspective, the U.S. has dominated the global order uncontested for decades, and now is the time to reshape it. Trump’s isolationist approach creates a vacuum that China is eager to fill. Since the end of the COVID-19 pandemic, President Xi has been actively working to bring numerous countries under China’s influence. In line with ancient Chinese diplomatic traditions, he hosts world leaders with grandeur, organizes regional summits, travels extensively, and signs massive trade deals.
In recent years—and now more than ever—China has swiftly moved into any space vacated by U.S. International organizations such as the World Bank and the World Health Organization, from which Trump withdrew support, and has found a welcoming patron in China.
Thus, with long-term planning and clear strategic intent, China meets Trump 2.0 in a different position than during their first encounter. Now, China holds significant influence in the Middle East, Southeast Asia, South America, and Africa and serves as the largest trading partner for 120 countries. The Chinese government is now focused on further strengthening its ambitious “Belt and Road Initiative,” which aims to position China at the heart of global trade networks through a land and maritime cooperation strategy, including control over ports and transportation routes in partner nations. Chinese companies have built more than 1,200 projects across 150 countries as part of this flagship initiative.
At the same time, China presents itself as a nation that values peace and stability, which it emphasizes in contrast to Trump’s isolationism and unpredictability. However, a significant gap remains between China’s diplomatic rhetoric and aggressive actions in the South China Sea and against Taiwan. Beijing has yet to prove itself as an effective mediator or an authentic promoter of global peace, nor does it appear willing to defend its allies when needed. Additionally, China’s ongoing courtship of European and Southeast Asian nations—hoping that Trump’s new administration will drive them into its arms—has yet to succeed. While there is no clear indication that these nations will turn their backs on their natural ally, one thing is sure: their bargaining power has increased, and they owe that leverage to China.
The West Is Trapped in a Sense of Superiority
The imposition of reciprocal tariffs has yet to prove effective, and The Wall Street Journal even referred to Trump’s latest tariff hikes as “the dumbest trade war in history.”
However, “trade war” does not accurately reflect what is happening. This war is, first and foremost, about technological supremacy and control over the future of technology. Behind the justified American claims regarding unfair trade practices, intellectual property theft, market dumping, subsidies, trade imbalances, and lack of intellectual property protection lies a more profound fear—the loss of technological advantage. China’s push for self-reliance and leadership in fields such as artificial intelligence, semiconductors, quantum computing, and 5G is viewed in the U.S. as a national security threat.
The trade war officially began in 2018, providing enough time for a retrospective analysis of the effectiveness of the measures taken against China. These sanctions aimed to slow China’s technological progress by restricting technology exports and blocklisting companies. Yet, despite the lack of clear winners or losers, it is evident that the American strategy has not only failed but has backfired. The restrictions imposed during Trump’s first term forced China to accelerate its path toward self-sufficiency and technological advancement in multiple fields. The phenomenal progress in artificial intelligence and semiconductors is often attributed in China to what they call “Trump’s courtesy” or “thanks to Trump.”
It seems that the Western world in general, and the United States in particular, have not yet shed their sense of superiority—or perhaps their underestimation of the Chinese (while the Chinese, in contrast, have historically viewed themselves as superior to the West). Time and again, the U.S. has been caught off guard by China’s ability to close the gap—and in some cases, even surpass American capabilities. The U.S. was surprised when China developed an advanced stealth fighter jet, a hypersonic missile, 5G technology, and artificial intelligence innovations—an area where China aims to achieve global dominance by 2030. Even in advanced pharmaceuticals, where American companies have traditionally reigned supreme, a Chinese biotech firm recently shocked the industry with a breakthrough lung cancer treatment.
The Big Bang in Artificial Intelligence
Then came DeepSeek, with its advanced AI models, low operational costs, and open-source approach. DeepSeek caught the U.S. off guard, primarily due to its ability to process and analyze massive amounts of data. It raised doubts about the effectiveness of efforts to slow China’s technological progress. This new player in the field has shaken the perception of American supremacy in a domain where the U.S. had previously held unquestioned leadership. DeepSeek is likely just the first of many Chinese AI companies that have benefited from massive government support and a vast domestic market of 1.4 billion people—again, “thanks to Trump.”
The Biden administration attempted to curb China’s progress by restricting exports of advanced semiconductors, blocking American investments, and blocking Chinese tech giants such as Huawei and ZTE. Huawei serves as a prime case study in the technological battle. While U.S. restrictions initially hampered its ability to develop and manufacture products, they ultimately propelled it to the forefront of technological innovation. In 2019, after being blocked by the U.S., patriotic Chinese consumers responded by purchasing only Huawei smartphones. That same year, under the slogan “Only Huawei,” the company surpassed Apple in smartphone sales. A year later, it stunned the American tech world by launching HarmonyOS, a significant alternative to Android—marking a clear step toward reducing reliance on Western technology.
On the other hand, Nvidia is an example of an American company caught on the losing side of this battle. U.S. restrictions limited its sales to China, prompting the Chinese government to launch an antitrust investigation against the company. In recent months, Nvidia’s market value has plunged by nearly a trillion dollars, including a $600 billion drop in the week following DeepSeek’s emergence. The Chinese government continues to support domestic tech firms while restricting Nvidia’s market access, forcing it to rely more heavily on exports to other countries. However, even those exports are now at risk. Trump has proposed blocking AI technology sales to about 150 countries, fearing they could be intermediaries for transferring technology to China. If implemented, such a move could weaken the U.S. while pushing other nations into Huawei’s welcoming embrace, as the company eagerly awaits the opportunity to absorb Nvidia’s displaced customers.
Since the COVID-19 pandemic, China’s economy has struggled to regain momentum. It cannot afford further economic slowdown since it can no longer rely on export growth as a primary driver. This may be the key reason the trade war under Trump’s second term is unfolding more tempered. While Trump imposed tariffs of around 20%, this is significantly lower than the 60% he initially promised before taking office. Similarly, China responded with moderate measures, imposing “only” a 15% tariff on agricultural goods.
On the one hand, Trump has filled the White House with China hawks like Mike Pompeo, who remains persona non grata in China. On the other hand, he unexpectedly intervenes to save TikTok. This apparent softening may be linked to Elon Musk, who has secured a central role in the White House and enjoys close ties with the president. Musk is not known for his moderation, but his vast investments in China and extensive connections with the Chinese government must be considered. The Chinese market is Tesla’s second-largest revenue source, and during the TikTok crisis, the Chinese government suggested Musk acquire the company. The New York Times recently quoted Musk as saying he is confident that “the U.S. will find ways to work with China to ease tensions.”
Signs of Reconciliation?
The potential for escalation remains in sensitive areas such as additional restrictions on semiconductor manufacturing equipment and the export of rare metals. For example, the $100 billion investment agreement between Taiwan’s TSMC and the U.S. further increases tensions over the island. China has already declared that moving chip production from Taiwan to the U.S. in exchange for protection could be grounds for war.
Historian Yuval Noah Harari has warned that World War III could break out due to military escalation in the South China Sea. China claims sovereignty over maritime territories there, which could lead to military conflict with neighboring nations.
However, despite this threat, it is essential to remember that China has a pragmatic and realistic side, which may prevent escalation. It operates based on realpolitik and rational considerations, driven by the fundamental need to continue feeding, supporting, and providing energy for its 1.4 billion citizens. Given this existential necessity, global stability is its top priority.
In the Middle East conflict, even though China expresses a firm stance in favor of the Palestinians, its primary concern is ensuring a stable supply of oil, gas, and other resources. A regional war does not serve this goal. As China struggles to rebuild its sluggish economy, stabilizing exports and investments becomes essential, which, in my view, lowers the likelihood of military action.
The muted responses to Trump’s restrictive measures further support this assumption. As long as Trump does not touch an overly sensitive nerve—which, beyond causing real damage, could also lead to a severe loss of face for President Xi’s administration—China’s reactions are expected to remain restrained.
China’s realism makes its responses to these events more predictable, certainly more so than those of the Trump administration. This assumption could serve as the foundation for seeking a resolution to the conflict, as global challenges like climate change, regional wars, and pandemic prevention depend on cooperation between these two superpowers.
It is time for more advanced solutions. Instead of imposing additional restrictions, the better approach is to grant China access to Western technology and make it dependent on American and Taiwanese production.
Achieving such cooperation will not be easy. These are two global powers with fundamentally different worldviews and economic structures. Moreover, American public opinion is increasingly hostile toward China, while nationalist sentiments are rising within China.
Understanding China’s unique needs and aspirations is essential in diplomacy. For some time now, China has been trying to position itself as a fair mediator capable of brokering peace. It successfully facilitated negotiations between Saudi Arabia and Iran but demonstrated inexperience in mediating between Hamas and Fatah. While Chinese officials have cautiously stated they are willing to mediate in the Middle East, neither Israel nor the U.S. has seriously pursued this offer.
This presents an opportunity to bring China to the negotiating table, where it can leverage its significant influence over Iran, Yemen, North Korea, and Russia.
President Trump made an impressive move by inviting Beijing to mediate in the Ukraine war. “They have a lot of influence,” he said, “and we intend to work with them.” Such cooperation could give Beijing precisely what it seeks—the chance to prove to the world that it is a superpower committed to peace.
Any approach to China should be treated with great respect—not only in practice but also in appearance. A public and highly visible diplomatic overture could be the key to drawing China into negotiations.
One final note, based on insights I have gained through years of working closely with China: If both sides are wise enough to follow the Chinese (and now also American) approach—where things do not necessarily have to be accurate but must appear so—they can reach an agreement that includes painful but mutual concessions, all while presenting it outwardly as an “absolute victory.”
By doing so, we may finally find ourselves on the right path, and “the land will have peace for forty years.”
