Resident Senior Fellow
Head, Trade ‘n Technology Program
On his first day in office, President Donald Trump issued the America First Trade Policy executive order – one of 26 executive orders released that day. These 26 executive orders were followed by another 117 over the next 99 days – the most by any president in living memory. At the turn of its 125th day in office, the second Trump administration has been the most meaningfully active – and disruptive – presidency since the first 125 days of President Franklin Roosevelt’s presidency, both on the domestic and international policy front. The outlines of an emerging strategic doctrine as well as an emerging China policy, both from a national security and economic and trade standpoint, are beginning to be evident too. A common theme cuts across the Trump administration’s strategic and economic frameworks, both globally and vis-à-vis China, which is the explicit acknowledgement for the first time that the age of American post-Cold War dominance has come to an end. And the reframing of America strategy in light of this new era of global multipolarity is intended for two purposes:
Upon taking office in January 2021, it had taken the Biden administration a month and a handful of days to issue its lodestar Securing America’s Supply Chains executive order, which was geared as much at enhancing the resilience of U.S. supply chains as it was towards competing and selectively decoupling from China. The second Trump administration’s guiding framework to revitalize manufacturing and derisk ties with China, as encapsulated by its America First Trade Policy and America First Investment Policy executive orders, were issued by contrast by the end of its first month in office. A host of subsequent orders, including those related to the ‘Liberation Day’ reciprocal tariffs and China-specific ones (on fentanyl trafficking, on de minimis shipments) have since followed.
The administration’s framework for economic and trade ties with China is built with four objectives in mind:
The administration has been clear regarding its overarching trade and economic policy goals vis-à-vis China.
It is much less clear on how to realize these goals, and for good reason. Trade deficits are a product of investment, consumption, and savings imbalances and are disconnected from tariff levels, except at very high tariff levels. Structuring ‘reciprocal tariffs’ to eliminate or significantly reduce bilateral trade deficits is an unrealizable goal, which has left counterpart countries perplexed, markets shaken, and consumer confidence weakened. Consumer sentiment is currently down 30% points from January and recorded its lowest reading since July 2022; in the week following the Liberation Day tariff announcement, 30-year Treasury bond yields chalked their largest single weekly increase since 1987. The unusual movement of bond prices falling alongside stock prices furthermore (typically the two move in opposite directions but large stock market downturns can precipitate fire sales of government bonds by leveraged and illiquid financial market participants) was a signal of the markets’ generalized loss of confidence in U.S. economic decision-making, given the larger-then-anticipated severity of the reciprocal tariffs and the administration’s confusion on an implementation strategy. As for reshoring manufacturing, that is easier said than done, particularly in an era when the bulk of cross-border exchanges are conducted in intermediate goods.
The administration is entirely unclear about the end state of its trading relationship with Beijing beyond the three broad objectives.
The end state matters. From a strategic standpoint, China seeks an interdependent relationship, if only to facilitate its own modernization goals. If a degree of interdependence is rejected and the U.S. market substantially closed to Chinese goods and investment, what is China’s reciprocal interest and incentive in further opening its market to U.S. exports? And if the U.S. chooses to pursue its own sweetheart market purchases deal with Beijing, why should allies and partners have to burn their (trade) bridges with China? Besides, the U.S. overestimates the extent to which its allies and partners are willing to follow it down the path of casual disregard of multilateral trade and treaty law in their dealings with Beijing. In the absence of a consensus on what the end state should look like, cabinet appointees have taken to improvising their own preferred solutions in context of the reciprocal tariffs that have been paused for 90 days on allies and partners, and more lately on China (the fentanyl tariffs as well as earlier layers of Section 232, 301, etc. tariffs on China remain in force).
At this juncture, it is unclear where the administration’s trade policy vis-à-vis allies and partners as well as with China will finally land. In most likelihood, allies and partners will be asked to strip China out of critical or industrially salient US-centric supply chains and in certain sectoral instances, even from ownership of relevant production facilities, in exchange for reduced tariffs. Given that the U.S.’ ever-lengthening list of sectors to be subjected to supply chain resiliency concerns (steel and aluminum; autos and auto parts; truck and truck parts; pharmaceutical and biotechnology; semiconductors; critical minerals; food supplies and farmland; ports and shipping terminals; AI; quantum; hypersonics; aerospace; advanced manufacturing; and directed energy), third country trade and investment with China cannot but be impacted, going forward. Whether the Trump administration is able to impose a ‘U.S. or China provision’ on the lines of the notorious ‘China Clause’ in the USMCA agreement (Article 32.10, which essentially allows the U.S. to terminate the USMCA agreement with either one or both of the signatories if one or both enters into a free trade agreement with China) in its agreement with allies and partners, remains to be seen. Canada and Mexico may be unique cases; most countries do not share a trading relationship of the depth and dependence that Ottawa and Mexico City share with Washington.
As for the near-term outlook with regard to China, the greater likelihood is that the administration will seek extensive managed access to China’s market for American goods and services to rebalance trade on the lines of the Phase One market purchases agreement of January 2020, while simultaneously stripping-out interdependencies in advanced technologies and critical infrastructure supply chains. Senior administration officials have hinted along these lines, of late. Exports controls will continue to drop at regular intervals too. In mid-May, the Commerce Department issued an advisory against the use of American AI chips for training and inference of Chinese AI models. On the same day, guidance alerting industry against the use worldwide in any form of Huawei’s Ascend series of chips was also issued, claiming that the design or production of these chips likely involved one or more violations of the U.S. export control rules. Later in May, it was reported that U.S. companies specializing in chip software-related electronic design automation (EDA) have been ordered to stop selling their services to Chinese groups. EDA software, along with semiconductor equipment manufacturing, are the two weak links within China’s chips ecosystem, with U.S. EDA players accounting for 80% of China’s EDA market. It has also been recently reported that the administration has suspended certain licenses to sell jet engines and components to China’s state-owned national aerospace champion, COMAC. COMAC’s C919 airliner still relies heavily on joint ventures with U.S. firms such as GE Aviation, Honeywell, Collins Aerospace, and Parker Aerospace to produce systems related to avionics core processing, flight control, communications and navigation, hydraulics, wheels and braking, and most importantly the C919’s LEAP-1C jet engine. Earlier in March, a number of Chinese quantum, hypersonics, high-performance computing, cloud computing players and data service providers were placed on the Entity List.
Whether the U.S. and China are able to consummate a deal during the 90-day tariff pause period remains to be seen. Trump 1.0’s dealmaking with China was riddled with 90-day negotiation periods and false starts. And had COVID struck just a month or two earlier, even the Phase One agreement of January 2020 could have fallen by the wayside. The recent late-May export control measures (listed above) are reportedly being threatened to wring Beijing’s hand to follow through on its side of the 90-day pause bargain on granting rare earths-related licenses to U.S. non-defense industrial buyers. If the two sides do nevertheless manage to arrive at a negotiated solution, some of the tariffs will come off but they will not be withdrawn entirely (effective U.S. tariffs on China are in the 50% range today even after the 90-day tariff pause), given that a variety of China-related tariffs are stacked on top of one another and additional Section 232 sectoral investigations are also underway. On the other hand, if headway in U.S.-China negotiations fail to be made, additional reprisals could include the delisting of Chinese firms on Wall Street, including those utilizing the variable interest entity (VIE) structure, the imposition of dollar-linked property blocking sanctions on Chinese firms and secondary sanctions on Chinese banks, and even the terminations of China’s MFN status and the bilateral income tax convention. Some of these punitive measures could happen regardless of the trade and tariff outcomes.
In a landmark revision in December 2017, the first Trump administration had noted in its National Security Strategy that the post-Cold War age of international relations had come to an end and that a new era of “great power competition had returned.” Per this view, “geopolitical competition between free and repressive visions of world order” was the greatest challenge of the age and its locus now belonged firmly in the Indo-Pacific region. The National Security Strategy became the first strategy document by any administration to prioritize the Indo-Pacific theater over the European theater within the U.S.’ scheme of strategic priorities. While President Trump referred to China as a “rival” power in his remarks introducing the strategy, the admin’s strategy document referred to China (and Russia) as a “revisionist” power.
Maintaining its focus on China, the first Trump administration’s National Defense Strategy of January 2018, referred to China as a “strategic competitor” with whom the U.S. was in “long-term strategic competition”. A month later, the administration’s overarching strategy document for the Indo-Pacific titled U.S. Strategic Framework for The Indo-Pacific listed its key national security challenge as being to “maintain U.S. strategic primacy in the Indo-Pacific region and promote a liberal economic order while preventing China from establishing new, illiberal spheres of influence …”
The Biden administration continued in this vein, deeming China to be “the only competitor that was potentially capable of combining its economic, diplomatic, military, and technological power to mount a sustained challenge to the international system” in its Interim National Security Strategic Guidance of March 2021. This framing remained unchanged in the October 2022 National Security Strategy, with China designated as “America’s most consequential geopolitical challenge.” Also in October 2022, the Biden administration’s National Defense Strategy described China as the U.S’ “pacing challenge” (while Russia was an “acute threat”).
On May 30, 2025, U.S. Defense Secretary Pete Hegseth delivered the plenary remarks at the Shangri La Dialogue forum in Singapore. In his remarks, Hegseth outlined the Trump administration’s defense and national security vision for the Indo-Pacific region. That vision is overwhelmingly China-centered and aimed, in his view, at containing the strategic threat that it poses to the Indo-Pacific region.
Per Mr. Hegseth, “deterring aggression by Communist China” in the Indo-Pacific is the single most important national security priority after the defense of the U.S. homeland. “China seeks to become a hegemonic power in Asia … and dominate and control” the Indo-Pacific region. The overarching goal of U.S. strategy, then, must be to “ensure that China [is not allowed to] dominate us – or our U.S.’ allies and partners,” Hegseth warned. He then went on to note that the most likely theater of China’s “aggression” was Taiwan, where an attempt to conquer the self-governing island by force “could be imminent”. In this regard, Hegseth affirmed that “President Trump has said that Communist China will not invade Taiwan on his watch … [and] so, our goal is to prevent war, to make the costs too high, and peace the only option.” Borrowing, further, from Trump’s ‘peace through strength’ approach, Secretary Hegseth declared that “prioritizing forward-postured, combat credible forces in the Western Pacific to deter by denial along the first and second island chains” would be the Department of Defense’s foremost priority. During Trump 1.0 too, it was the policy of the Defense Department to “(1) deny China sustained air and sea dominance inside the first island chain in a conflict; (2) defend the first island-chain nations, including Taiwan; and (3) dominate all domains outside the first island-chain.” Asian allies and partners were asked, alongside, to ramp up their own defense spending and capabilities, while European allies needed to take ownership of and prioritize their own security (rather than spreading forces thin by deploying to the Indo-Pacific region) so that the U.S. could concentrate its fighting power in the Western Pacific and defend Taiwan.
Secretary Hegseth’s remarks in Singapore are founded on the Defense Department’s March 2025 Interim National Defense Strategic Guidance – the first strategy planning document of the second Trump administration. The Secretary’s remarks and the Guidance, as reported, maintain broad continuities and sharp departures from previous planning documents vis-à-vis China. The Guidance will feed into the administration’s National Defense Strategy, which is expected to be completed by the early date of end-August 2025 (the Trump administration has yet to release an Interim National Security Strategic Guidance, and given the upheaval within the National Security Council including the possibility of it being stripped of the responsibility to formulate long-range policy, it is not known if an interim guidance is even planned).
From a continuity standpoint, Trump 2.0’s Interim National Defense Strategic Guidance is framed on the lines of classic Cold War-era strategy planning documents that sought to ensure that areas with industrially significant capabilities (at the time, Great Britain, Germany, Japan) would not be permitted to fall into the hands of an adversary able to combine hostile intent with capabilities (Soviet Union). The objective of containment, then, during the Cold War was to limit the Soviets’ ability to control other major power centers. In similar vein, the Trump 2.0 Interim Guidance resolves to ensure that none of the “key region[s]” today (the Indo-Pacific, Europe, and the Middle East) are allowed to fall under the hegemony of the U.S.’ rivals – China, Russia and Iran. Since only one of today’s three regions (the Indo-Pacific) could potentially fall under the dominance of a rival power (China), the foremost objective of Trump 2.0’s global strategy after the defense of the U.S. homeland is to prevent China from imposing its regional dominance in the Indo-Pacific. Secretary Hegseth said as much in Singapore, when he referred to Asia as a “vital region” that would not be allowed to be dominated by China.
Also, from a continuity standpoint, China is described as the U.S.’ “sole pacing threat” in the Interim Guidance. Biden’s Defense Department had characterized China as the U.S.’ “pacing challenge” in its National Defense Strategy of October 2022. That China has been upgraded from a “challenge” to a “threat” is consistent with Republicans’ harder line views on China. Trump 1.0’s language regarding China was harsher than Bidens too.
The discontinuities in the second Trump administration’s emerging strategic framework for China are more significant than the continuities. And there is no greater discontinuity in the emerging framework than the emerging force planning and sizing guideline which is to be assembled apparently around a single war focus – or ‘single war construct’ – or an approximate variation based on the same principle. The notion that the U.S. military should be able to fight more than one war at once and in different geographic theaters – or ‘two war construct’ – has long been a staple of U.S. defense planning and was first codified during the Cold War. To be clear, the ‘two war construct’ has been flexibly interpreted during the post-Cold War period, from the Clinton administration’s “win-hold-win” formulation, to the Bush administration’s force-sizing capability to “defeat aggression in overlapping major conflicts while preserving for the President the option to call for a decisive victory in one of those conflicts” to the Obama administration’s force-sizing capability to “defeat a regional adversary in a large-scale multi-phased campaign …[while] imposing unacceptable costs on a second aggressor in another region”.
The second Trump administration’s single war force planning construct, with China as the Defense Department’s “sole pacing threat” (and a Taiwan contingency as the Department’s “sole pacing scenario”) would constitute a major defense policy innovation and a marked break from decades of U.S. defense planning, going back to the Second World War. The Indo-Pacific theater is clearly at the front-and-center of the administration’s defense planning and force sizing priorities. And deterring – and, if need be, defeating – China in a war over Taiwan is the Defense Department’s most important and immediate priority, after the defense of the U.S. homeland (which, to be clear, extends to hemispheric defense too in order to deny Russia and China the ability to utilize Western hemispheric states or the regional commons as a strategic launching pad to threaten the security of the U.S. homeland).
Three important implications flow from Trump 2.0’s single war force planning construct, or an approximate variation based on the same concept.
First, the final status of Taiwan may no longer be a matter that is to be left solely to the two sides across the strait to resolve. From a U.S. defense policy standpoint, Taiwan is the tip of the spear to contain China from breaking through the ‘first island chain’ and projecting power into the Western Pacific and against the U.S. territories of Guam and the Northern Mariannas. The operative question that arises, then, is this: if Taiwan is a forward position or vehicle for the military containment of China, can the U.S. merely stand aside if political forces on both sides of the strait choose greater economic integration and political closeness? As far-fetched as this possibility might seem at this time, the U.S. diplomatic position on cross-strait affairs until now is that Washington does not use the Taiwan card to contain or compete with China. This diplomatic position might be changing – much like the Biden administration had quietly begun to digress from the U.S.’ Shanghai Communique position that it (only “acknowledged” but) would “not challenge” Beijing’s ‘One China Principle’ that Taiwan is a part of China.
Second, the singular focus on the defense of Taiwan will lead to a surge in the U.S. military’s vast war-fighting capabilities into the Western Pacific theater in ways that the Obama administration’s and subsequent administration’s rebalance/pivot to Asia never managed to achieve (Japan has recently proposed a somewhat complementary “one-theater” defense planning approach that would treat the various East China Sea, South China Sea and the Korean peninsula theaters as a single military theater). The singular focus will be felt across the Defense Department’s priorities from technology development to weapons procurement and production to tactics related to distributed operations and allied support. In his remarks at the Shangri La Dialogue, Secretary Hegseth flagged a number of advanced U.S. military capabilities to be deployed to the region. And earlier, in early May, he issued a memo that redirects the Pentagon’s investment in equipment towards high-intensity conflict relevant to combat in the Indo-Pacific, such as air and missile defenses, longer-range munitions, prepositioned equipment and materiel, and A.I.-enabled command and control networks. A longer-term question remains though as to which countries in maritime Asia are willing to host some of these new capabilities, given their fear of Chinese retaliation.
Finally, the corollary of the singular focus on the Western Pacific, and Taiwan in particular, will be a relative U.S. military retrenchment from other global theaters – with a drawdown in the European theater being the most prominent one. The administration’s logic of retrenchment runs as follows: since China is the U.S.’ “sole pacing threat” and the U.S. military is sized to prevail in just one major war at a time (a full-blown Taiwan contingency) and hence must not be spread thin, U.S. forces and capabilities that are essential to defeating the Chinese military must be held back from the other main theaters. In Europe and the Middle East, allies rather are to be empowered to assume ownership of their own security, and the role of U.S. and allied force planning, going forward, in these other theaters is to bridge capability gaps that would arise due to the denial or transfer of U.S. forces and capabilities to the Western Pacific. This message has more-or-less been conveyed to the U.S.’ Euro-Atlantic partners, and Secretary Hegseth reinforced it in Singapore by observing that he would much prefer that the overwhelming balance of European security investment be on its own continent.
Trump 2.0’s separation-of-theaters strategy runs counter to the Biden administration’s policy of incrementally crowding-in NATO and the Western Europeans in Indo-Pacific strategic affairs. It also runs counter to the wishes of the U.S.’ most important Indo-Pacific allies, Japan and Australia, who prefer to augment, at least conceptually, the indivisibility of the Euro-Atlantic and Indo-Pacific theaters. As for Beijing, the relative U.S. military retrenchment from other global theaters comes with both pros and cons. On the plus side, the creeping involvement of NATO in Indo-Pacific affairs is likely to come to a screeching halt. European deployments in the Indo-Pacific are likely to be tapered down too. On the other hand, Beijing will now have to contend with the full might of the U.S. military’s fighting power.
At this time, from a U.S. nuclear weapons use standpoint, the Trump administration’s emerging single war force planning construct does not appear to hold any significant implications. The single war construct is premised on the capability to prevail crushingly in just one major war at a time, and that too in a single geographic theater. The current nuclear weapons employment planning guidance, updated by the Biden administration in 2024, on the other hand, requires the simultaneous deterrence of Russia, China and North Korea through peacetime, crisis-time, and conflict. It also calls for future arms control agreements or arrangements with Russia to account for the U.S.’ global strategic deterrence requirements. Trump 2.0 appears to be following in this vein, having called on China to be brought into – not merely factored into – nuclear arms reduction talks.
In an insightful commentary following the November 2022 mid-term elections, two European security analysts had identified three foreign policy “tribes” in the Republican Party. First were the ‘primacists’ like Mike Pompeo and Nikki Haley who sought to maintain U.S. leadership and military presence worldwide. This included a strong deterrent posture not only in Asia but also in Europe and the Middle East. Next, were the ‘restrainers’ who advocated strength at home, restraint abroad particularly with regard to the use of military force, and disentanglement from foreign alliances. J.D. Vance and Steve Bannon were exemplars of this tribe. The final foreign policy tribe were the ‘prioritisers’ who sought to maintain a forward deployed presence but a selective one only – one that is exclusively focused on the Cold War-like existential threat posed by China. As per this tribes’ view, given the intensity of the China challenge and a (supposed) looming military confrontation over Taiwan, the U.S. military did not possess a two-war capability. Rather, forces need to be transferred out of Europe and the Middle East and, on lines of a single war planning construct or proximate variation thereof, be deployed to the Indo-Pacific theater to confront the epic scale of the China challenge. The second Trump administration’s emergent strategic framework for China bears the fingerprints of the ‘prioritisers’ (although the political strength of the ‘restrainers’ should not be discounted) and it is instructive that the lead drafter of the National Defense Strategy at the Defense Department at this time, Under Secretary of Defense for Policy, Elbridge Colby, is seen as a leading light within the ‘prioritisers’ tribe.
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