Source: Culture Horizon
Introduction
On January 20, 2025, Trump was officially sworn in as the President of the United States. Trump's return to the White House has once again cast a shadow of doubt on the Sino-US competition over technology. Will Trump continue the technology containment policy of the Biden era? Or will it bring a glimmer of hope for the Sino-US technology competition? At a time when technology competition has become a key issue in global politics, Trump's technology policy toward China in the 2.0 era will have a profound impact on the future world pattern.
This article is a prediction and outlook on Trump's technology policy in the 2.0 era. This article puts forward three key predictions: First, Trump's second term is likely to continue and escalate the technology war with China; Second, there is room for negotiation between China and the United States on the issue of technology restrictions;Third, if China and the United States cannot reach a compromise on technology issues, Trump may take more stringent restrictions. On the one hand, Trump does have many national security hawks and technology hawks around him who hope to continue the technology sanctions on China; on the other hand, compared with the Biden administration's repeated emphasis on "non-negotiable" technology restrictions on China, there is a greater possibility of negotiation during the Trump administration.
This article points out that due to Trump's personality and ambition for a second term, the Sino-US technology war will not be his top priority, but may hinder his international and domestic agenda. At the same time, Trump's guiding strategy for technology competition with China in his second term may not be overly focused on how to restrict China like the Biden administration, but will focus more on how to make American technology companies "stronger and stronger". To this end, Trump may focus on "deregulating" the US technology industry and appropriately relax export controls on some less advanced AI chips and semiconductor manufacturing equipment to ensure that related companies can continue to make money from the Chinese market and invest in research and development. At the same time, Trump will actively use tariffs to force the return of high-tech manufacturing, and may even introduce so-called "component tariffs", that is, taxing products based on internal components rather than assembly locations.
However, the fact that China and the United States can "talk" about the technology war does not mean that they can "talk it out". If the Sino-US technology war escalates further, Trump's "America First" and unilateralist tendencies will make it easier for him to aggressively use extraterritorial jurisdiction tools such as foreign direct product rules and minimum content rules to force allies to cooperate, rather than mainly exerting pressure through diplomatic channels like Biden. In the short term, this will make life more difficult for China's semiconductor industry, making it unable to maintain and expand advanced chip production capacity. But in the long term, this may also force US allies such as ASML to more actively exclude US technology from their equipment. In addition, Trump may further weaponize the foreign investment review mechanism.
Although China is on the defensive in the Sino-US technology war, it is by no means without cards to play. However, whether China can have the confidence to fight this technology war with the United States in the future, the progress of domestic semiconductor domestic substitution is still the most important determinant. Faced with the possible peaking of Moore's Law and the law of scale in new technologies, we also need to prepare for a rainy day.
Sino-US Tech War in the Trump 2.0 Era
The US’s suppression of China’s technology has become one of the core issues in the relationship between the two countries. In China’s view, this involves its own “legitimate right to development”, while the US government claims that this is a non-negotiable national security issue. During his tenure, the Biden administration significantly escalated the tech war against China, introducing a series of restrictive measures represented by large-scale semiconductor export controls. On January 20, Trump officially started his second term. What strategy will he adopt in the tech war against China? Will he continue Biden’s policies and introduce more stringent measures, or will he make some adjustments or even relax relevant sanctions?
Trump’s second term may continue or even escalate the tech war against China
At present, the mainstream view is that Trump is unlikely to relax high-tech restrictions on China in his second term. Trump's nominees for Secretary of State Rubio and National Security Advisor Waltz, traditional national security hawks, will even adopt a tougher policy. Recently, Biden's "Indo-Pacific Tsar" and Deputy Secretary of State Campbell revealed that during the handover between him and Trump's transition team, he felt that the Trump administration would continue Biden's technology policy toward China. He specifically mentioned that the position of Secretary of State-designate Rubio is highly aligned with that of the Biden team in this regard. Axelrod, the outgoing Assistant Secretary of Commerce for Export Enforcement, also believes that Trump will continue to implement high-tech export controls against China.
Technology hawks such as Peter Thiel, the founder of defense contractor Palantir, are also instigating the continuation of the technology war against China. Michael Kratsios, a former executive of Scale AI who was just nominated by Trump as the director of the White House Office of Science and Technology Policy, and Anderson Horowitz, an investor in defense technology companies, have a strong influence on the next government. These American entrepreneurs and the companies they control have set their sights on the big pie of the defense budget, hoping to sell technology and services to the government and the military, and get a piece of the pie from old arms dealers such as Raytheon. To this end, they continue to incite the atmosphere of technological confrontation between China and the United States, trying to push the defense budget to tilt more towards "defense technology." In order to get more government support, OpenAI and Anthropic moved out the old-fashioned "technological ideology" routine, emphasizing that the artificial intelligence of the United States is democratic, the artificial intelligence of the Eastern powers is authoritarian, democracy and authoritarianism are incompatible, and the United States must ensure that American artificial intelligence companies representing democracy win the competition.
There is room for negotiation between China and the United States on technological restrictions
The key person who determines the direction of the US technology war policy against China is undoubtedly Trump himself. Trump, who is about to usher in his second term, has stronger control and greater flexibility in terms of policy, personnel, and autonomy than in his first term. The advisers around him have also completely changed a group of people, basically very loyal to him.
In dialogue with China, the Biden administration stressed that the issue of technology restrictions on China is "non-negotiable", but this may not be the case in Trump's second term. Bolton, Trump's national security adviser during his first term, pointed out in his memoir, The Room Where It Happened, that Trump actually wanted to use the Huawei issue as a bargaining chip in trade negotiations with China, and made it clear during a call with Chinese leaders that Huawei could be part of the China-US trade agreement. During the 2018 G20 Summit, he even promised in person with Chinese leaders that he would "immediately allow" American companies such as Qualcomm to continue to supply Huawei. Bolton recalled that if he and other China hardliners in the government had not strongly dissuaded them, China and the United States might have copied the ZTE case and reached an agreement on the Huawei issue. Recently, Trump's nominee for Secretary of Commerce Howard Lutnick also said that Trump actually "wanted to make a deal with China" and tariffs were his negotiating tool to achieve his goals.
Trump's personality traits and ambitions for his second term determine that the technology war with China will not be his top concern. Trump is essentially a very self-centered person, which is reflected in many aspects. Jonathan Karl, a New York Times reporter who has been following him for a long time, mentioned several old stories about Trump in his new book "Tired of Winning". On the day of September 11, 2001, when a hijacked plane crashed into the World Trade Center Twin Towers, Trump's first reaction after seeing the news on TV was: "Now Trump Tower is finally the tallest building in New York." During the Capitol Hill riots on January 6, 2021, Trump was indifferent to the casualties caused by the riots and repeatedly encouraged the overthrow of the election results. During his first term, many of his policies revolved around how to ensure his re-election. In his second term, he will not have the pressure of re-election, and his focus will turn to how to win the Nobel Peace Prize and how to go down in history as one of the greatest American presidents on par with Washington and Lincoln, and win a posthumous reputation.
Therefore,externally, he will work hard to promote the resolution of the two wars in Russia and Ukraine and the Middle East, and this particularly requires the assistance of China. Domestically, he will focus on MAGA's core policy issues and domestic reforms. On the one hand, he will solve the trade imbalance problem faced by the United States, attract the return of manufacturing, and create more jobs; on the other hand, he will focus on deregulation and tax cuts to enhance the competitiveness of American companies. Although the technology war with China is important to national security hawks, it is far from Trump's own priority and even hinders his domestic agenda, so he may not be very interested. A simple observation indicator is that compared with issues such as trade, tariffs, and fentanyl, Trump's limited statements on chips rarely include remarks about continuing or escalating the technology war with China.
Based on the above factors, Trump and Biden's guiding strategies for the technology war with China may be quite different. Biden wants to decouple from Chinese technology, but in order to take care of the commercial interests of American companies, he can only proceed step by step, so his actions are very contradictory and twisted. For example, some conservative think tank experts believe that China's domestically produced semiconductors are like putting together an extremely complex puzzle. The Biden administration's semiconductor export controls only take away one or two pieces of the puzzle, allowing China to concentrate its efforts on attacking the one or two missing pieces. The result is that it has not been able to stop China's technological progress, but has also hurt the interests of American companies.
Recently, U.S. Commerce Secretary Raymondo reviewed the Biden administration's experience and losses in the technology war against China, and concluded that it is futile to rely solely on bans and sanctions to stop China's technological progress. The United States should invest more in domestic technological innovation to defeat China. Trump's guiding strategy for technological competition with China in his second term may not be as overly focused on how to restrict China as the Biden administration, but will focus more on how to make American technology companies "stronger and stronger" and how to get back what the United States does not have or has lost.
To achieve "the strong will always be strong", Trump will focus on "deregulating" the US technology industry, especially removing various federal and state environmental protection regulations that restrict the construction of US data centers and power plants, promoting the "Manhattan Project" of artificial intelligence, and providing sufficient computing power, energy, and financial support for the early realization of general artificial intelligence in the United States.
In the past two years, US semiconductor companies have been complaining that the Biden administration's export controls have benefited competitors in allied countries, but have caused US companies to have no money to invest in research and development due to the loss of revenue from China, and have fallen into a "death spiral". Trump may respond to these complaints and appropriately relax export controls on some less advanced AI chips and semiconductor manufacturing equipment, so that these companies can continue to make money from China and support their R&D investment. After all, the goal of semiconductor export controls is to hold China back as much as possible and ensure the US's technological advantage. Export controls are only one part of a combined strategy to curb China's computing power supply chain, and the scale can be adjusted.
Recently, the high-tech investment review in China, which was pushed by Congress and the Biden administration, was successively inserted into the 2025 National Defense Authorization Act, the Short-term Expenditure Act and other "must-pass" bills, but was eventually removed by Trump and Musk under pressure. Essentially, it is because the relevant review directly cuts off the channels for American capital represented by Wall Street to make money from China. Trump recently forwarded an article on social media, "Perdue's Serving as Ambassador to China Will Boost the Confidence of Chinese and American Investors", which also hinted that he might pay more attention to economic benefits and pragmatism in relations with China. In terms of concepts, overly strict export controls and reverse investment reviews are a strong intervention of the government in the economic activities of enterprises, which is directly contrary to the economic liberalization concepts of Trump, Musk and others, and is also an object of "deregulation".
In order to get back what the United States does not have or has lost, Trump will actively use tariff tools to force the high-tech manufacturing industry to return. For Chinese electric vehicles, the Biden administration has formulated national security review rules for connected car software and hardware, hoping to completely cut off the Chinese and American electric vehicle industries. But Trump publicly expressed his welcome for Chinese electric vehicles to invest and set up factories in the United States. This is because Trump sees the technological advantages of China's electric vehicles and the value of creating jobs, and hopes to use tariffs to guide Chinese automakers to invest in the United States, so as to achieve certain technology transfer and employment.
Trump disdains the industrial policies represented by the Biden administration, such as the "Chips Act" and the "Inflation Reduction Act", calling them "terrible" plans, and believes that tariffs can encourage domestic production and the return of advanced manufacturing industries more than industrial subsidies. Recently, the Biden administration launched a 301 investigation into China's mature process chips, paving the way for Trump to impose tariffs on China's mature process chips in advance. Trump may introduce the so-called "component tariffs", that is, taxes based on the internal components of the product rather than the assembly location. As long as the chips are produced in China, high tariffs will be imposed regardless of where the final assembly location is. This move can not only offset China's industrial subsidies and the price advantages of mature process chips, but also help to attract more chip production capacity in China to the United States. After the Biden administration launched the 301 investigation, it is rumored that SK Hynix and Samsung have begun to gradually transfer domestic production capacity in China. Regarding advanced chip manufacturing, Trump accused Taiwan of stealing the US chip industry. One TSMC Arizona plant can no longer satisfy his appetite. He will increase pressure on Taiwan and even tie it to the "protection fee" of military aid to Taiwan, forcing TSMC to further transfer advanced chip manufacturing to the United States.
If China and the United States cannot reach a compromise on technology issues, Trump may take more stringent restrictions
China and the United States "can talk" on the issue of technology war, but it does not mean "can talk". Since China has elevated this issue to the level of "right to development", the Trump administration is bound to put forward a higher price, and even directly link it with solving the problem of bilateral trade imbalance. If the China-US negotiations fail, Rubio and other national security hawks will gain power again and further escalate relevant restrictions. For example, more Chinese technology companies will be put on the entity list, or the restricted areas will be expanded from advanced semiconductors, quantum computing and artificial intelligence to electric vehicles, power batteries and other broader areas.
In order to strengthen the implementation of semiconductor export control policies, the Trump administration may also increase pressure on allies such as the Netherlands, Japan, and South Korea. The chip war has been fought to this point, and the United States has run out of ammunition, and urgently needs the cooperation of allies such as the Netherlands, Japan, and South Korea. Although the Netherlands, Japan, and South Korea have basically cooperated with the United States' requirements for some time, they have also turned a blind eye. They have to take into account their relationship with China, and even more so the commercial interests of their own companies. It is impossible for them to unconditionally and completely cooperate with the US control. By unilaterally exempting Dutch and South Korean citizens from 15 days of visas for business, tourism and other activities in China, and resuming some high-level exchanges and dialogues with Japan, China has recently stabilized or improved its relations with these countries, objectively offsetting the pressure from the United States.
Trump's "America First" and unilateralist tendencies make it easier for him to aggressively use extraterritorial jurisdiction tools such as foreign direct product rules and minimum content rules to force allies to cooperate, rather than mainly exerting pressure through diplomatic channels like Biden. Due to the US monopoly in certain technical links of the semiconductor supply chain (for example, ASML is still highly dependent on US light sources, electron beams, software and high-purity semiconductor materials), US allies such as ASML, Tokyo Electron, Samsung and SK Hynix will have to swallow the bitter fruit. In the short term, this will make life more difficult for China's semiconductor industry, unable to maintain and expand advanced chip production capacity. But in the long run, this may also force US allies such as ASML to more actively exclude US technology from their equipment.
In addition to export control tools, the Trump administration will further weaponize the foreign investment review mechanism.During Trump's first term, he pushed Congress to pass the Foreign Investment Risk Review Modernization Act (FIRRMA), which significantly expanded the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS), and the focus of the review shifted from defense and counterterrorism to the field of science and technology. Technology security and data security have become the focus of CFIUS's review of Chinese mergers and acquisitions in the United States. Since then, many Chinese mergers and acquisitions involving data security or sensitive personal information have been vetoed by the Trump administration or required to take mitigation measures, such as Ant Financial's acquisition of MoneyGram and Kunlun Wanwei's acquisition of Grindr. A 2020 study showed that during Trump's tenure, the overall approval rate of CFIUS reviews of Chinese investment transactions was no more than 60% (the approval rate during Obama's administration was over 95%).
Recently, Trump publicly opposed Nippon Steel's acquisition of American Steel. This is the case for Japanese companies, let alone mergers and acquisitions from China. At present, Chinese technology companies have encountered great obstacles in investing in the United States, but Trump's second term may adopt a "presumption of denial" approach similar to export controls to deal with all technology investments from China, vetoing most mergers and acquisitions, or at least requiring more stringent mitigation measures, even if the relevant investments do not involve cutting-edge technology. Although Trump's nominee for Treasury Secretary, Bensont, came from a hedge fund, he has always believed that economic policy and national security are inseparable. Trump may also retain the reverse investment review rules passed during the Biden administration and actually implement them, strictly controlling US capital's investment in China's advanced semiconductors, quantum computing and artificial intelligence.
China's response strategy
In response to the US's technological restrictions, China has taken corresponding countermeasures. In fact, although China has been on the defensive in the technology war in the past few years, it is by no means without cards to play. After the Biden administration announced a new round of semiconductor export controls on China on December 2, 2024, China quickly announced that it would ban the export of dual-use items related to gallium, germanium, antimony, and superhard materials to the United States in principle, and implemented stricter end-user and end-use reviews for another key raw material, graphite. China has also launched the Chinese-style "foreign direct product rule" and "minimum content rule" in Article 49 of the Export Control Regulations. Even if the above items have been exported outside China, they need China's permission to sell to American companies. China has made great difficulties for the United States to obtain key technologies that are essential for semiconductor and weapons manufacturing by taking advantage of its reserves and production of key metals, as well as its leading smelting and solvent extraction technology. Govini, a US defense software company, recently pointed out that China's export ban affects most departments of the US military and more than 20,000 parts that are very important to its weapons production, involving more than 1,000 weapon systems. In addition, China has also used cybersecurity reviews and antitrust reviews to put pressure on the business of American semiconductor companies such as Micron and Intel in China, which is widely regarded by the outside world as a countermeasure to the US technology war. If Trump escalates the technology war with China in his second term, China may implement more key metal controls with a more resolute attitude, and even further cut off the export of rare earth elements to the United States. American technology companies in China will also face more risks of Chinese countermeasures. However, whether China can have the confidence to fight this technology war with the United States in the future is the most important determinant of the progress of domestic semiconductor substitution. China has gradually caught up in the field of chip design. Breaking the US technical blockade of semiconductor manufacturing equipment as soon as possible is the most critical next step, because no matter how good the design drawings are, it is difficult to transform them into advanced chips without equipment. Trump may relax the export of finished chips to China, but he should not relax the control of semiconductor manufacturing equipment. Because ensuring that China cannot produce AI chips that can compete with the United States is extremely important to keep American companies "strong and strong" and ensure that the United States reaches general artificial intelligence first. In this field, we can only hope to achieve domestic breakthroughs as soon as possible.
In recent years, there has been an increasing discussion about the peak of Moore's Law and the Scaling Law. If chip manufacturing approaches physical limits, model training hits the data wall, and the speed of related technology iteration slows down, it will be a godsend for China to catch up. China should also prepare for a rainy day, start researching other technical routes as early as possible, and strive to explore opportunities to overtake in the future.
As Professor Yan Xuetong of Tsinghua University said in a recent article in Foreign Affairs: The competition between the United States and China will not be based on ideology like the Cold War with the Soviet Union, but on technology. In the digital age, security and prosperity depend to a large extent on technological progress. China and the United States will compete over innovation in areas such as artificial intelligence, and compete for markets and high-tech supply chains. The game between China and the United States in the high-tech field will become a more important issue in bilateral relations during Trump's second term. Based on Trump's personal characteristics and the policy priorities of his second term, the United States' next strategy for the technology war against China will have more room for negotiation than during the Biden administration. President Xi Jinping stressed during his meeting with Biden in Lima that China and the United States should extend the cooperation list, expand the cooperation cake, and achieve win-win cooperation. Trump also recently stated that China and the United States can solve all problems in the world together. While China strives to promote self-sufficiency in advanced technology and get rid of external dependence, it should be good at using political wisdom, seize fleeting negotiation opportunities, and gain more time and space for China's technology industry.
This article was originally published in "Cultural Horizons" Issue 1, 2025, with the original title "Sino-US Technology War in the Trump 2.0 Era".
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