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December 12, 2025

Volume 5

Issue 25

ICAS Trade ‘n Tech Dispatch (online ISSN 2837-3863, print ISSN 2837-3855) is published about every two weeks throughout the year at 1919 M St NW, Suite 310, Washington, DC 20036.
The online version of ICAS Trade ‘n Tech Dispatch can be found at chinaus-icas.org/icas-trade-technology-program/tnt-dispatch/.

This is the final TnT Dispatch of 2025. Thank you for your support this year!

What's Been Happening
(Source: UnSplash)

-1-

Washington Intensively Debates its Chips and Trade Strategy vis-a-vis China

-1-

In One Sentence

  • President Trump on December 8 allowed Nvidia to export its H200 AI chip to “approved customers” in China and other countries with a 25% surcharge.
  • The GAIN AI Act that passed through the Senate in October as part of the 2026 National Defense Authorization Act was left out of the NDAA last week after facing intense lobbying led by Nvidia and the White House.
  • Congressional leaders are in last-minute talks over adding new restrictions on U.S. investments in China to the annual defense bill, with key lawmakers expressing optimism that the provision will be included.
  • On December 3, Nvidia CEO Jensen Huang met with President Trump and warned that U.S. export restrictions risked ceding the China market, the world’s second-largest AI market, and enabling Chinese firms like Huawei to build an “AI Belt and Road” abroad, arguing the U.S. must keep competing rather than letting China dominate globally.
  • On the same day, Nvidia CEO Jensen Huang discussed export controls as Congress abandoned a proposal to restrict advanced chip sales to China, prompting sharp criticism from lawmakers like Sen. Elizabeth Warren who warned that allowing Nvidia’s high-end chips into China would endanger U.S. national security.
  • Chinese Vice Premier He Lifeng, Treasury Secretary Scott Bessent, and USTR Jamieson Greer held a video call on December 5 to advance implementation of the Trump-Xi October deal, pledging to expand cooperation, address economic and trade concerns, and sustain stabilization efforts agreed to in Busan.
  • Treasury Secretary Bessent on December 3 said that China is on track to fulfill its U.S. trade commitments, including 12 million metric tons of soybean purchases, while defending Trump’s global tariff strategy.
  • The China Council for the Promotion of International Trade (CCPIT) led a trade delegation to the U.S. from December 3 to 7 to implement the recent head-of-state consensus, meet U.S. officials and industry groups, and host business matchmaking events aimed at deepening China-U.S. economic and trade cooperation.

Mark the Essentials

  • It was reported on December 9 that Beijing is considering restricting domestic access to Nvidia’s newly approved-for-export H200 chips.
  • At the same December 3 meeting with President Trump, Nvidia CEO Jensen Huang discussed U.S. chip export restrictions and praised lawmakers’ decision to exclude the GAIN AI Act and state-level AI preemption from the defense bill while urging a single federal AI standard to avoid fragmented state regulations.
  • On December 4, China announced that it is issuing streamlined, year-long “general licenses” to speed up civilian rare earth exports, fulfilling a key commitment from the Trump–Xi meeting even though the broader dual-use licensing regime remains in place. 
  • China’s rare earth exports rose 26.5% in November to 5,493.9 tons, rebounding after President Xi and President Trump agreed to accelerate shipments amid ongoing supply disruptions caused by earlier export controls.
  • Industry groups have been urging USTR since October to respond to China’s alleged failure to meet its January 2020 Phase One commitments with stronger trade actions, including expanded and higher tariffs or broader import and export restrictions, while some business groups countered that years of Section 301 duties have failed to change Beijing’s behavior and warn new tariffs would be ineffective and costly.
  • Republicans are divided over whether to block state AI regulations and impose new federal rules, alongside a White House push to preempt state laws. This has become a major obstacle to finalizing the National Defense Authorization Act (NDAA) as GOP lawmakers, state officials, and Democrats all voice strong objections. 
  • It was reported on December 3 that the U.S. has paused planned sanctions against China’s Ministry of State Security and the imposition of new export controls to avoid jeopardizing the October trade truce, despite Beijing-linked hackers being tied to a years-long cyberespionage campaign.
  • U.S. crop exports to China have resumed with 7 vessels for soybean or sorghum now loading or en route as of December 2, marking the first physical shipments since the Trump-Xi trade talks in late October and signaling tentative progress toward China’s pledged purchases despite volumes still falling short of pre-trade-war levels.
  • At the first public hearing on December 3 ahead of the 2026 USMCA review, witnesses urged U.S. officials to make economic security and coordinated measures to reduce reliance on China central to the treaty’s update, including proposals for a North American economic security committee and aligned controls on Chinese trade and investment.

Keeping an Eye On…

The U.S.-China trade truce that was hammered out over multiple rounds of negotiations in Geneva, London, Stockholm, Madrid and Kuala Lumpur, and blessed thereafter by Trump and Xi in Busan, appears not just to be holding but veritably flourishing. Both sides moved early to meet their commitments after Busan. Within ten days of the meeting, China had suspended its retaliatory tariffs on a swathe of U.S. agricultural products, removed 15 U.S. companies from its Control List and an additional 10 from its Unreliable Entity List (UEL), paused its special port charges on U.S. ships, lifted its export bans on gallium, germanium, antimony and superhard materials as well as on Nexperia’s legacy chips, and export controlled 13 precursor chemicals used in the manufacture of fentanyl. For its part, the U.S. maintained the suspension of its heightened reciprocal tariffs on imports from China, halved its fentanyl-linked tariffs on China, paused the implementation of its Chinese vessels-related port fees and related shipbuilding measures, and suspended its export control ‘50% Affiliates Rule’. In the weeks since, the pace of implementation has been stepped up, with Chinese buyers maintaining their “cadence” on U.S. soybeans purchases (12 million metric tons to be ordered by end-Feb 2026) and a first batch of rare earth elements (REE) export “general licenses” being issued by China’s Commerce Ministry.       

Over on the U.S. technology export control front, the developments over the past two weeks have been even more fluid. Until earlier this week, questions remained on the Trump administration’s approach and strategy on de-controlling the sale of high-end AI chips to China. On more than one occasion, President Trump had teased the idea of allowing the sale of advanced AI chips and had even lifted some chip controls aimed at China in August. Because the administration has further prioritized increasing advanced semiconductor exports, it was unable to form an internal consensus on a replacement rule for the Biden-era AI Diffusion Rule, which it killed in May and was aimed at preventing high-end AI chips from reaching ‘adversaries’. The White House Special Adviser for AI and crypto, David Sacks, has been at the forefront of rejecting drafts of the replacement rule, arguing that they are too restrictive and risked penalizing U.S. chip firms unnecessarily from profiting from chips sales overseas. The White House also leaned on Congress last month to keep out a measure from its must-pass defense bill that would have limited a U.S. company’s ability to sell advanced AI chips to China and other adversary nations. On the other hand, bowing to pressure within the Beltway and from Silicon Valley, Trump did make a decision prior to his meeting with President Xi in South Korea to take advanced Blackwell-class chips off-the-table for export to China. All this had fueled speculation that the White House was looking to ease restrictions blocking Chinese buyers from accessing top-end AI chips. 

Now comes confirmation that the administration has in fact green-lighted the sale of Nvidia’s H200 AI chip, a vastly superior improvement from an AI training and inference perspective over Nvidia’s previously export-decontrolled H20 chip, and with High Bandwidth Memory to boot (export of HBM to China is currently heavily restricted). The decision punches a massive hole through the previous administration’s ‘small yard, high fence’ philosophy, which had held that access to advanced AI chips and to the tools needed to manufacture them were – and needed to remain – the most significant controllable factor to ensure U.S. leadership vis-à-vis China in the AI race. This is not the first time the administration has revised its predecessor’s landmark achievements, having done so earlier by kiboshing the Inflation Reduction Act’s solar and EV subsidies. The argument that this H200 decontrol amounts to a veritable selling of the rope by which the capitalists (the U.S.’ chip and AI ecosystem) will hang themselves, as its critics charge, is overwrought. The Chinese government is just as leery of fostering a new dependency at home on an imported core technology. Indeed, the buildout of China’s advanced chipmaking ecosystem is premised on the same logic that animates the U.S.’ critical minerals and REE buildout spree: jaw-jaw with the U.S. government to keep advanced chips and chip-production equipment flowing while buying time to scale up to a self-sufficient level of advanced chip-making capability. Rather than get “addicted” to these advanced albeit slightly degraded H200 AI chips (Nvidia’s Blackwell and upcoming Rubin series chips already eclipse its H200 chip based on the Hopper series), the aim is to translate that current access into a short-term opportunity to stay competitive in the AI race while eschewing the re-creation of longer-term dependencies.

Expanded Reading

-2-

New National Security Strategy elicits Groans from Beltway Elites and Overseas Allies alike

-2-

In One Sentence

  • The White House on December 5 unveiled a new National Security Strategy, reflecting Trump’s “America First” philosophy, portraying European allies as weak, and sought to reassert American dominance in the Western Hemisphere.
  • The strategy announced a “Trump Corollary” to the Monroe Doctrine in the Western Hemisphere, which among other things arrogates a right of intervention in Western Hemispheric affairs and envisions a region where “governments cooperate with us against narco-terrorists, cartels” and remains “free of hostile foreign incursion or ownership of key assets.” 
  • On China, the strategy said it would “rebalance America’s economic relationship,” prioritizing “reciprocity and fairness”  and will rework trade relations to be “focused on non-sensitive factors” while “maintaining a genuinely mutually advantageous economic relationship with Beijing.”
  • It also seeks to deter conflict with China over Taiwan and the South China Sea by strengthening U.S. and allied military power, emphasizing Taiwan’s strategic importance, and urging partners like Japan and South Korea to increase defense contributions.

Mark the Essentials

  • The 33-page document said that the “days of the United States propping up the entire world order like Atlas are over“ and called allies and partners to “assume primary responsibility for their regions and contribute far more to our collective defense.”
  • The strategy warned that Europe’s economic stagnation is overshadowed by the “prospect of civilizational erasure,” while vowing to “reestablish strategic stability with Russia.”
  • While targeting allies, it also called on them in adopting trade policies that “help rebalance China’s economy toward household consumption” and called for their support to “counteract predatory economic practices and use our combined economic power to help safeguard our prime position in the world economy.” 
  • The strategy states that the U.S. “must continue to improve commercial (and other) relations with India” to support its role in Indo-Pacific security through the Quad with Australia and Japan, while also working “to align the actions of our allies and partners with our joint interest in preventing domination by any single competitor nation.”
  • In response, China on December 8 warned the United States to stop “external interference” over Taiwan, while Taiwan welcomed the U.S. approach and reiterated plans to strengthen its own defense.

Keeping an Eye On…

In December 2017, when the First Trump Administration announced the return of great power competition in its National Security Strategy and characterized China as a “revisionist power”, the Beltway establishment had cheered lustily. Never mind that Trump himself may not have been on board with his own administration’s National Security Strategy – the closest he came to labeling China in his foreword was as a “rival power.” None of his foreign and defense policy measures were markedly different from his predecessors’ measures or bore the urgency of supposedly-revived great power competition. For the establishment though, bubbling with anti-China sentiment and fed on a gruel of unending but unsatisfying wars, the comforting blanket of an approaching second Cold War was exhilarating. America might or might not have found a new purpose, but the Beltway elites certainly had found their calling.

Eight Decembers later, the mood is anything but exhilarated following the release of the Second Trump Administration’s National Security Strategy – even though, or perhaps because, the strategy is very much written in the president’s voice and hence is a more authentic enumeration of the administration’s interests and goals. Competition with China is no longer the central organizing principle of U.S. foreign policy. Redefining the U.S.’ terms of (dis)engagement with the globalist order, including the terms of burden-sharing vis-à-vis allies, is. The U.S. is no longer in geostrategic and ideological systems-based competition with China. Commercial gain and technological primacy, rather, is the currency of competition, with geoeconomics superseding geopolitics. Asia is to be won economically, with the purpose of deterrence being to balance power and thereby allow all countries to enjoy a decent peace where trade flows openly and fairly. The era of anchoring alliances and international institutions has passed. America is no longer the world’s Atlas; it is once again a ‘normal’ nation – albeit a leading one – with a normal, not overextended, set of vital interests.  

For all the National Security Strategy’s landmark revisions that have landed poorly within the Beltway establishment as well as with overseas allies and partners, important elements of continuity with the December 2017 strategy document, especially on the commercial, trade and technology side, were retained. The economic pillar of strategy precedes the geopolitical pillar, economic security as national security has been amplified. Reindustrialization, including the buildout of the U.S.’ defense industrial base, is prioritized. Industrial policy is to be enhanced. Trade is to be rebalanced, although through a continuation of purblind protectionism. “Energy dominance” is to be restored, shorn of renewables-based sources. U.S. foundational technologies and standards are to be protected and, thereafter, disseminated widely to ensure U.S leadership. Truth be told, if one adds the words ‘with like-minded allies and partners’, many of these points would bear similarities to the Biden administration’s “foreign and economic policy for the middle class”.

Make no mistake though, at the end of the day, the Second Trump Administration’s National Security Strategy is not about grand canvas geoeconomics or geopolitics, nor is the America First brand necessarily about isolationism or withdrawal from the world. Rather, the purpose of reframing America’s engagement with – as well as  disengagement from – the world is to restore a wider scope for unilateralist policy maneuver. As a result, the United States becomes less encumbered in the global arena, allowing its engagement with other nations to be governed chiefly by the immediate national interests implicated in each policy matter. Whatever one’s view of the president, this impulse is set to have a lasting hold on this and future Republican administrations, long after Trump has departed from office. 

Expanded Reading

On the Hill

Legislative Developments

  • In early December, Nvidia secured a major lobbying win after lawmakers left the GAIN AI Act out of the defense bill, a move CEO Jensen Huang called “wise,” arguing the measure would be even more harmful to the U.S. than the Biden-era AI Diffusion Act. 
  • Key White House officials, including AI czar David Sacks, backed by the Office of Legislative Affairs, played a crucial role in excluding AI chip export restrictions from the NDAA. 
  • On December 3, the House Foreign Affairs Committee passed legislation by Rep. Young Kim (R-CA) and Rep. Gregory Meeks (D-NY) to sanction individuals and entities involved in illegal, unreported, and unregulated fishing, with lawmakers accusing China of carrying out nearly half of the operations and saying “if Beijing won’t hold these exploitive vessels and individuals accountable, the U.S. must.” 
  • On December 4, a bipartisan group of senators, led by Sen. Pete Ricketts (R-Neb.) and Sen. Chris Coons (D-Del.), introduced the SAFE Chips Act, which attempts to codify existing restrictions on export of AI chips to China and other adversaries for 30 months.

Hearings and Statements

  • On December 1, three House Democrats, Reps. Alexandria Ocasio-Cortez (D-NY), Rosa DeLauro (D-CT), and Angie Craig (D-MN), introduced the “No Gratuitous Overcharging Ubiquitous Global Exports (No GOUGE) Act,” which bars companies from selling tariffed goods at “unreasonably high” prices for five years. 
  • On December 3, Trump’s NASA nominee Jared Isaacman, a tech billionaire and Elon Musk ally, faced a rare second Senate confirmation hearing where he defended his 62-page “Project Athena” plan to overhaul NASA’s priorities.

Expanded Reading

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