The way Trump hunts Chinese high-tech companies will be very different from Biden's.

Source: Cultural Chronicle

Introduction

On January 20, 2025, Trump was officially sworn in as the President of the United States. Trump's return to the White House raises doubts about the competition between China and the United States in the field of technology. Will Trump continue the technology containment policies of the Biden era? Or will there be a glimmer of hope for the competition between China and the United States in the field of technology? In the current era where technological competition has become a key global political issue, the technology policy towards China in the Trump 2.0 era will profoundly impact the future world order.

**This article is a prediction and prospect of technology policy in the era of Trump 2.0. ** This paper makes three key predictions: first, Trump's second term is likely to extend and escalate the tech war against China; Second, there is room for negotiation between China and the United States on the issue of technological limitations; Third, if China and the United States are unable to reach a compromise on science and technology, Trump may impose tougher restrictions. On the one hand, Trump does have many national security hawks and tech hawks around him, hoping to continue the technology sanctions against China; **But on the other hand, compared with the Biden administration's repeated emphasis on "non-negotiable" technology restrictions on China, the Trump administration has a greater possibility of negotiation. **

This article points out that due to Trump's personality and ambition for a second term, the US-China tech war will not be his top priority and may instead hinder his international and domestic agendas. At the same time, Trump's guidance strategy for tech competition with China in his second term may not overly focus on how to limit China like the Biden administration, but rather on how to make American tech companies "stronger." To this end, Trump may focus on "deregulating" the US tech industry, easing export controls on some less advanced AI chips and semiconductor manufacturing equipment to ensure that relevant companies can continue to make money from the Chinese market and invest in research and development. At the same time, Trump will actively use tariff tools to force high-tech manufacturing to return to the US, and may even introduce so-called "component tariffs", which tax products based on their internal components rather than their assembly location.

However, the fact that China and the United States can negotiate on the issue of technological warfare does not mean that they are able to reach an agreement. If the technological warfare between China and the United States escalates further, Trump's 'America First' and unilateralism 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 primarily relying on diplomatic pressure like Biden.** In the short term, this will make it even harder for the Chinese semiconductor industry and unable to maintain and expand its advanced chip production capacity. However, in the long term, this may also force US ally companies such as ASML to more actively exclude American technology from their equipment. Moreover, Trump may further weaponize foreign investment review mechanisms.

In the Sino-US technology war, although China is in a defensive position, it is by no means without cards to play. However, whether China will have the confidence to fight this technology war with the United States in the future still depends on the progress of domestic semiconductor localization. In the face of issues such as the possible end of Moore's Law and the scale law, we also need to be prepared for the future.

The Sino-US Tech War in the Trump 2.0 Era

The U.S. crackdown on China's science and 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 maintains that it is a non-negotiable national security issue. During the Biden administration, it has significantly escalated its technology 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 technology war against China, will he continue Biden's policy and introduce tougher measures, or will he adjust or even relax relevant sanctions?

Trump's second term may continue or escalate the technology war against China

For now, the prevailing view is that Trump is unlikely to ease high-tech restrictions on China in his second term. Traditional national security hawks, such as Trump's nominee for Secretary of State Marco Rubio and National Security Adviser Waltz, will even take a tougher line. **Recently, Deputy Secretary of State Campbell, the "Indo-Pacific Czar" of the Biden administration, revealed that in the handover of work between him and the Trump transition team, it feels that the Trump administration will continue Biden's technology policy on China. In particular, he noted that Secretary of State-designate Rubio's position is highly aligned with the Biden team in this regard. Axelrod, the outgoing assistant secretary for export enforcement at the Department of Commerce, also believes that Trump will continue to enforce export controls on China's high-tech technologies.

Tech hawks such as Peter Thiel, founder of defense contractor Palantir, are also agitating for a continuation of the tech war against China. **Former Scale AI executives, Michael Krazios, who was just nominated by Trump for director of the White House Office of Science and Technology Policy, and Anderson Horowitz, an investor in defense technology companies, have strong influence on the next administration. These American entrepreneurs and the companies they control are eyeing 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 established arms dealers like Raytheon. To this end, they continue to incite the atmosphere of scientific and technological confrontation between China and the United States, trying to push the defense budget to tilt more towards "national defense science and technology". In order to get more government support, OpenAI and Anthropic have moved out of the old-fashioned "ideologization of technology" routine, emphasizing that the United States' artificial intelligence is democratic, and the artificial intelligence of the eastern powers is authoritarian, democracy and autocracy 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 technology restrictions

Undoubtedly, the key figure determining the direction of the United States' technology war policy towards China is President Trump himself. As he enters his second term, President Trump has greater control and flexibility in terms of policy, personnel, and autonomy compared to his first term. The group of advisors around him has also completely changed, consisting mainly of loyal confidants.

**In dialogue with the Chinese side, the Biden administration stressed that technology restrictions on China are "non-negotiable," but not necessarily in Trump's second term. **In his memoir, "The Room Where It Happened," Trump's national security adviser during his first term, Bolton noted that Trump had actually wanted to use the Huawei issue as a bargaining chip in trade negotiations with China, and made it clear in a phone call with Chinese leaders that Huawei could be part of the U.S.-China trade deal. During the 2018 G20 Leaders' Summit, he even promised in person in a meeting with Chinese leaders that he would "immediately allow" Qualcomm and other American companies to continue to supply Huawei. Bolton recalls that if it weren't for the efforts of himself and other hardliners in the government to dissuade China, China and the United States might have copied ZTE's case and reached an agreement on Huawei. More recently, Trump's nominee, Commerce Secretary Howard Lutnick, also said that Trump actually "wants to make a deal with China" and that tariffs are his negotiating tool to achieve his goals.

Trump's personality traits and ambitions for a second term determine that the technology war with China is not his top concern. Trump is fundamentally a self-centered person, which is reflected in many aspects. Jonathan Karl, a New York Times reporter who has been covering him for a long time, mentioned in his book 'Tired of Winning' that on September 11, 2001, when the hijacked plane crashed into the World Trade Center towers, Trump's first reaction after seeing the news on TV was, 'Now Trump Tower is finally the tallest building in New York.' On January 6, 2021, during the Capitol riot, Trump showed no concern for the casualties caused by the riot and repeatedly incited to overturn the election results. During his first term, many of his policies were focused on ensuring his re-election. In his second term, without the pressure of re-election, his focus will shift to how to win the Nobel Peace Prize and secure a place in history as one of the greatest U.S. presidents alongside Washington and Lincoln.

Therefore, outwardly, he will strive to promote the resolution of the two wars between Russia and Ukraine and the Middle East, which particularly require China's assistance. Inwardly, he will focus on the core policy issues of MAGA, focusing on domestic reforms, on the one hand, to address the trade imbalance faced by the United States, attract the return of manufacturing, and create more employment opportunities; on the other hand, to focus on regulation and tax reduction, enhancing the competitiveness of American companies.** Although the technology war with China is important to the hawks in terms of national security, it is relatively far from Trump's personal priorities and even hinders his domestic agenda, so he may not have much interest in it.** A simple observation indicator is that compared to issues such as trade, tariffs, and fentanyl, Trump's limited statements on chips are rare in terms of continuing or upgrading the technology war with China.

Based on the above factors, Trump and Biden may have significant differences in their guiding strategies for the technology war with China. Biden wants to decouple from China's technology, but can only proceed in a step-by-step manner to take care of the business interests of American companies, so his actions are contradictory and awkward. For example, some conservative think tank experts believe that China's domestic semiconductor self-sufficiency is like solving an extremely complex puzzle. The Biden administration's semiconductor export controls only take away one or two pieces from the puzzle, allowing China to concentrate its efforts on solving the missing pieces. As a result, it has failed to stop China's technological progress and has also harmed the interests of American companies.

Recently, US Secretary of Commerce Raymond reviewed the gains and losses of the Biden administration's tech war against China, and concluded that it is futile to rely solely on bans and sanctions to prevent China's technological progress. If the US wants to defeat China, it should invest more in domestic technological innovation. Trump's second term strategy for tech competition with China may not be as focused on how to restrict China as the Biden administration, but rather on how to make US tech companies stronger and how to regain what the US does not have or has lost.

To achieve the principle of "the strong get stronger", Trump will focus on 'deregulating' the technology industry in the United States, especially by removing various federal and state-level environmental regulations that restrict the construction of data centers and power plants, and promoting the 'Manhattan Project' for artificial intelligence, to provide sufficient computing power, energy, and financial support for the United States to achieve general artificial intelligence as soon as possible.

Over the past two years, US semiconductor companies have been constantly complaining that the export controls of the Biden administration have made it cheaper for competitor countries of allied countries, but have caused US companies to lose revenue from China and have no money to invest in research and development, leading to a "death spiral." Trump may respond to these complaints by relaxing export controls on some less advanced AI chips and semiconductor manufacturing equipment, allowing these companies to continue to earn money from China and support their R&D investment. After all, the goal of semiconductor export controls is to drag China down as much as possible and ensure US technological superiority. Export controls are only one part of the combination strategy to contain China's computing power supply chain, and the scale can be adjusted.

Recently, the review of high-tech investment in China promoted by Congress and the Biden administration has been stuffed into the 2025 National Defense Authorization Act, the Short-Term Spending Act and other "must-pass" bills, but it was finally removed by Trump and Musk under pressure, in essence, because the relevant review directly cut off the channels for American capital represented by Wall Street to make money from China. **Trump also recently retweeted an article on social media, "Perdue as ambassador to China will boost investor confidence in China and the United States," suggesting that he may be more focused on economic gains and pragmatism in his relations with China. At the conceptual level, excessively strict export controls and reverse investment reviews belong to the government's strong intervention in the economic activities of enterprises, which is directly contrary to the economic liberalization ideas of Trump and Musk, and also belongs to the object of "deregulation".

In order to reclaim what the United States does not have or has lost, Trump will actively use tariff tools to force high-tech manufacturing to return. In dealing with Chinese electric vehicles, the Biden administration has formulated national security review rules for networked car software and hardware, hoping to completely cut off the Sino-US electric vehicle industry. But Trump openly welcomes Chinese electric vehicles to invest and set up factories in the United States. This is because Trump sees the technological advantages and job creation value of Chinese electric vehicles, and hopes to use tariffs to guide Chinese car companies to invest in the United States, achieve certain technology transfer and employment growth.

Trump despises the industrial policies of the Biden administration represented by the "Chip Act" and the "Inflation Reduction Act," calling them "terrible plans," and believes that tariffs are more conducive to encouraging domestic production and advanced manufacturing to return. Recently, the Biden administration launched a 301 investigation into China's mature process chips, paving the way for Trump's next move to impose tariffs on China's mature process chips. Trump may introduce the so-called "component tariff," which taxes based on internal components rather than assembly location. Any chip produced in China, regardless of where it is finally assembled, will be subject to high tariffs. This move can not only hedge against China's industrial subsidies and the price advantage 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. For the manufacture of advanced process chips, Trump accused Taiwan of stealing America's chip industry. A TSMC factory in Arizona cannot meet his appetite, and he will increase pressure on Taiwan, even linking it to "protection fees" for military aid to Taiwan to force 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 severe restrictive measures

China and the United States can 'talk' about the issue of technological warfare, but it doesn't mean they can reach an agreement. Since China has elevated the issue to the level of 'right to development,' the Trump administration is bound to make higher demands, even directly linking it to the resolution of the bilateral trade imbalance. If the negotiations between China and the United States fail, hawks in national security, such as Rubio, will gain power again, leading to further escalation of related restrictions. For example, more Chinese technology companies may be added to the Entity List, or the restricted areas may be expanded from advanced semiconductors, quantum computing, and artificial intelligence to a wider range of fields such as electric vehicles and power batteries.

In order to strengthen the implementation of semiconductor export control policies, the Trump administration may also intensify pressure on allies such as the Netherlands, Japan, and South Korea.As the chip war continues, the United States has very few ammunition left 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 in the past period of time, they have also turned a blind eye to some extent. They have to consider their relationship with China and the commercial interests of their own companies. It is impossible for them to unconditionally cooperate with the US control. By unilaterally granting 15 days of visa-free entry to Dutch and Korean citizens for business and tourism activities in China, resuming some high-level exchanges and dialogues with Japan, China has stabilized or improved its relations with these countries in the near term, which objectively offsets the pressure from the United States.

Trump's "America First" and unilateralist tendencies make it easier for him to aggressively use extraterritorial jurisdictional tools such as the Foreign Direct Products (FDI) rule and the de minimis rule to force allies to cooperate, rather than primarily through diplomatic pressure, as Biden has done. **Companies in U.S. allies such as ASML, Tokyo Electron, Samsung, and SK hynix will have to swallow the bitter pill due to the U.S. monopoly on specific technologies in the semiconductor supply chain (e.g., ASML remains highly dependent on U.S. light sources, electron beams, software, and high-purity semiconductor materials). 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 longer term, it could also force U.S. allies like ASML to be more aggressive in excluding U.S. technology from their devices.

In addition to export control tools, the Trump administration will further weaponize the foreign investment review mechanism. During Trump's first term, he pushed for the passage of the Foreign Investment Risk Review Modernization Act (FIRRMA) by Congress, significantly expanding the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS). The focus of the review also shifted from national defense and counterterrorism to the technology field, with technology security and data security becoming key concerns in CFIUS reviews of Chinese mergers and acquisitions in the United States. Since then, numerous Chinese acquisitions involving data security or sensitive personal information have been rejected or required to take mitigation measures by the Trump administration, such as Ant Financial's acquisition of MoneyGram and Kunlun's acquisition of Grindr. A study in 2020 showed that the overall approval rate of Chinese investment transactions reviewed by CFIUS during Trump's tenure did not exceed 60% (compared to over 95% during the Obama administration).

Recently, Trump publicly opposed Japan's acquisition of American Steel Company. If this is the case for Japanese companies, let alone mergers and acquisitions from China. Currently, Chinese technology companies' investments in the United States have encountered significant obstacles, but Trump's second term may adopt a similar export control method of 'presumed denial' to handle all technology investments from China, vetoing most M&A transactions, or at least requiring more stringent mitigation measures, even if the relevant investments do not involve cutting-edge technology. The nominated Treasury Secretary, Benson, who was born in a hedge fund, has always believed that economic policy is inseparable from national security. Trump may also retain and enforce the reverse investment review rules passed during the Biden administration, strictly controlling US capital investment in advanced semiconductors, quantum computing, and artificial intelligence in China.

Response Strategies from the Chinese Side

In response to the U.S.'s technological restrictions, China has taken countermeasures to a corresponding degree. In fact, although China has been on the defensive in the technological war over the past few years, it is by no means untagged. **Following the Biden administration's announcement of a new round of semiconductor export controls to China on December 2, 2024, China quickly announced a principled ban on the export of gallium, germanium, antimony, and superhard materials related dual-use items to the United States, and imposed stricter end-user and end-use reviews on graphite, another key raw material. To this end, China has also activated the Chinese-style "foreign direct product rules" and "minimum content rules" under Article 49 of the Export Control Regulations, which require a Chinese license to sell to U.S. companies, even if the above items have been exported outside of China. China's use of critical metal reserves and production advantages, as well as its leading smelting and solvent extraction technologies, has made it difficult for the United States to obtain a number of key technologies for semiconductor and weapons manufacturing. Govini, a U.S. defense software company, recently pointed out that China's export ban affects most departments of the U.S. military and more than 20,000 components and components that are critical to its weapons production, involving more than 1,000 weapons systems. In addition, China has also used cybersecurity reviews and antitrust reviews to put pressure on the business of US semiconductor companies such as Micron and Intel in China, which is widely seen as a countermeasure to the US technology war. **If Trump escalates its tech war with China in his second term, China may take a more resolute stance to impose controls on more critical metals and even further cut off exports of rare earth elements to the United States. **U.S. tech companies in China will also be at risk of more Chinese countermeasures.

However, whether China will have the confidence to fight this technology war against the United States in the future is the most important determining factor for domestic semiconductor localization. China has gradually caught up in the field of chip design. Breaking the technical blockade of semiconductor manufacturing equipment by the United States at an early date is the next crucial step, because even with excellent design drawings, it is difficult to transform them into advanced chips without equipment. Trump may relax the export of finished chips to China, but he is unlikely to relax control over semiconductor manufacturing equipment. Ensuring that China cannot produce AI chips that can compete with the United States is extremely important for maintaining the dominance of American companies and ensuring that the United States reaches the forefront of general artificial intelligence. In this field, we can only hope for an early breakthrough in domestic production.

In recent years, there has been increasing discussion about the peaking of Moore's Law and the Scaling Law. If chip manufacturing approaches the physical limits, model training encounters a data wall, and the speed of related technological iterations slows down, it will be a great opportunity for China to catch up. China also needs to make contingency plans and start researching other technological routes as early as possible, striving to explore opportunities for future overtaking on the curve.

As Professor Yan Xuetong of Tsinghua University recently wrote 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 largely depend on technological progress. China and the United States will compete in areas such as artificial intelligence and vie for market 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 traits and the focus of his second term, the U.S.'s next strategy in the technology war with China will have more room for negotiation than during the Biden administration. President Xi Jinping emphasized during his meeting with Biden in Lima that China and the United States should expand their cooperation and achieve win-win cooperation. Trump also recently stated that China and the United States working together can solve all the world's problems. While China is striving for self-sufficiency in advanced technology and breaking away from external dependence, it should be adept at using political wisdom, seizing fleeting negotiation opportunities, and fighting for more time and space for the Chinese technology industry.

This article was originally published in the 1st issue of 'Cultural Horizon' in 2025, titled 'The Sino-US Tech War in the Trump 2.0 Era'.

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