When President Donald Trump launched the trade war with China in his first term, he did so amid a growing consensus in Washington that Beijing posed a long-term challenge to U.S. security, political and economic interests globally.
Now, China watchers on both sides of the aisle are concerned at signs that Trump is pivoting away from years of efforts to compete with America’s top geopolitical rival, which is likely to seize the moment and solidify its foothold in strategic industries that Trump wants to win back.
Reached by Newsweek by email, the White House sought more details before providing comment.
Setting Expectations
While Democrats have criticized Trump’s yearslong economic war with Beijing and his government’s perceived lack of coordination with key allies, they were largely supportive of a tougher approach to China, citing accusations such as unfair trade practices, currency manipulation and unequal access to the Chinese market.
The shift in Trump’s first presidency had such far-reaching effects on Sino-American sentiment in both capitals that former President Joe Biden found the chill of the new Cold War hard to reverse. Biden not only extended, but later expanded Trump-era tariffs and further tightened controls on U.S. tech exports over fears they were accelerating China’s military modernization.
Trump campaigned on a promise to be even tougher. Matthew Pottinger, his deputy national security adviser from 2019-2021, predicted Trump would “pick up the baton and run with it” in pursuing Section 301 investigations into Chinese trade practices considered harmful to international and U.S. economic interests.
In April, when the White House launched sweeping tariffs against friend and foe alike to bring Beijing to the negotiating table for a new trade deal, it appeared to signal the start of a new phase of the tech war, designed not only to address the trade deficit and revive U.S. manufacturing, but to ensure America stayed one step ahead of China in technological and military supremacy in an increasingly unstable world.
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Reaction and Compromise
The reaction from President Xi Jinping’s China was swift and targeted. It played the tit-for-tat tariff game for a while but reached quickly for the nuclear option of cutting American firms out of its rare earths supply chain, weaponizing its dominance in the same way the U.S. had sought to curb Chinese access to advanced computer chips.
Observers of the ongoing trade talks have sensed a shift in tone and approach, marked by a number of notable concessions in July—both symbolic and substantive—that they argued were overly conciliatory toward Beijing for the sake of securing an agreement.
At the top of the list are emerging technologies and the Trump administration’s decision to permit the export of U.S. tech—specifically Nvidia’s H20 artificial intelligence chip—to China, following an intense lobbying campaign by company CEO Jensen Huang, who had argued that further curbs would only accelerate Chinese domestic breakthroughs in the race to dominate the global AI market.
The decision has alarmed some of Trump’s current and former allies in the GOP.
“The H20 is a potent accelerator of China’s frontier AI capabilities, not an outdated AI chip,” said a July 28 letter to U.S. Commerce Secretary Howard Lutnick, signed by Pottinger and former Trump adviser Steve Bannon, among others.
Last week, it emerged that Trump had broken precedent by refusing a request by Taiwan President Lai Ching-te to transit the United States as part of his wider visit to Taipei’s remaining allies in Latin American—a diplomatic coup for China, which claims Taiwan as its own.
Brendan Smialowski/AFP via Getty Images
Michael Sobolik, a senior fellow at the Hudson Institute who signed the letter, told Newsweek: “Several factors are contributing to the shifting climate on China policy. The Trump administration wants to open up China’s market for American businesses, which is elevating the cooperative agenda for the moment.”
“The [Chinese Communist Party’s] willingness to leverage U.S. dependency on critical minerals is also curtailing the willingness of some officials to anger Beijing,” he said.
Sobolik said: “Jensen Huang is putting Nvidia’s profit margin ahead of U.S. national security. It’s the job of leaders in Washington to put national security ahead of one company’s economic interests. Selling advanced AI chips to China does the opposite: it equips China’s military with powerful tools to target Americans. We need to win the AI race, not unilaterally surrender to the Chinese Communist Party.”
Reached by email, a spokesperson for NVIDIA told Newsweek: “These criticisms are misguided and inconsistent with the Administration’s AI Action Plan. The H20 will not enhance anyone’s military capabilities, but will help America win the support of developers worldwide. The Administration has full visibility and authority over every H20 transaction.”
“China is opposed to politicizing, instrumentalizing and weaponizing tech and trade issues,” Liu Pengyu, China’s embassy spokesperson in Washington, D.C., said. “These actions will destabilize the global industrial and supply chains, and serve no one’s interests.
The Debate
If Trump stays the course, it would be among the biggest pivots in what was to be a generational U.S.-China rivalry. But not all are convinced Trump is showing his true hand.
George Magnus, an associate at the University of Oxford China Center, told Newsweek that Trump wants to demonstrate to the world that only he can strike trade deals with Beijing while his predecessor could not.
“I don’t think Trump and the administration are necessarily not thinking about China as a strategic adversary, but I think he wants to boast ‘a win’ in his first year in office and show to the world that America and China can do business together regardless,” Magnus said.
“We should also remember the U.S. has an America First investment policy memo which is unashamedly anti-China, and it’s not unlikely that the U.S. will withdraw [most favored nation] status from Chinese goods. So there is a lot of nuance and ambiguity in Trump’s poses and postures, all of which can be real,” he said.
Update 8/5/25, 3:28 p.m. ET: This article was updated with comments from NVIDIA and China’s embassy in Washington, D.C.
