While United States (US) President Donald Trump’s policies under his second term have shocked and shaken the world, and emerging contours of a new world order under the leadership of the US look starkly different from what existed until now, there still remains one common theme. The US-China competition, as seen under Trump 1.0, followed by the Biden administration and now under Trump 2.0 remain largely the same; just that they have become much more vigorous. Policies under Trump 2.0 targeting Chinese goods, services and investment show a continuation and further escalation of the hardline stance from Trump’s first term, driven by the goals of Making America Great Again (MAGA), through economic protectionism, focus on national security and reducing the economic reliance of the U.S. on China. The policies so far build on a mix of tariffs, investment restrictions and export controls. Recent actions signal greater aggression in his approaches aimed at China, than what they were in Trump’s first term.
Trump 2.0 has already seen the imposition of a 10% tariff on all Chinese goods entering the U.S., followed by an increase to 20% in March this year. The enacted tariffs, which were enacted via executive orders under the International Emergency Economic Powers Act, were justified as a response to China’s role in the fentanyl fuelled opioid crisis in the US and to reduce trade imbalances. This actually builds on the tariffs of the first term, such as the Section 301 duties on $ 370 billion worth of Chinese goods that aimed to counter unfair trade practices like the theft of intellectual property and subsidies tied to China’s Made in China 2025 plan. The plan is perceived as a threat to the technological leadership of the US, along with increasing economic competitiveness, which can potentially lead to job losses in the US. along with a shift in global power dynamics, particularly in high-tech industries. China’s DeepSeek was just the tip of the iceberg in this context. DeepSeek sparked a significant decline in Wall Street’s tech sector, with major losses for Nvidia and the Nasdaq composite. Additionally, DeepSeek’s cost-effective Artificial Intelligence (AI) model (albeit still under a shadow of doubt from American tech giants) challenges US firms, impacting markets globally and leading to investor shift towards bonds. Also, it has been alleged that the Chinese DeepSeek was able to create the powerful AI tool by leveraging stolen US technology and advanced semiconductors. Chinese goods across the spectrum often resort to such tactics.
A less noticed but impactful move is the push to eliminate the de minis threshold, which exempts low-value imports from duties. This would hit Chinese e-commerce firms hard and limit their abilities to directly ship to US consumers, tariff-free. Trump’s policies are also expected to tighten export controls on advanced computing, AI, semiconductors and quantum computing. These are sectors where Chinese firms provide services or rely on American technology. The move, flowing from Trump 1.0 seeks to disrupt China’s military-civil fusion and tech ambitions. In any case, the Biden administration had already implemented restrictions on US investments in China in the realms of AI, semiconductors and quantum computing technologies, which could threaten the national security of the US.
In February this year, Trump signed a National Security Presidential Memorandum directing the Committee on Foreign Investment in the US to impose strict limits on Chinese investments in strategic sectors, i.e. technology, critical infrastructure, agriculture, health care, energy and raw materials. This includes the protection of farm land and real estate near sensitive sites, reflecting US concerns about Chinese influence. Trump’s administration is also likely to expand the scrutiny of US investments in China. While this builds from a Biden-era framework, Trump 2.0 aims to prevent American capital from bolstering Chinese tech-firms, especially in semiconductors and AI. The focus now is on outright bans, rather than on mitigation agreements. Trump has already promised to stop China from buying up America and in line with this, the White House has framed China as a threat to national security. This actually points in the direction of a broader and more potent decoupling strategy, and could target Chinese firms from operating in the US or rerouting investments through third countries.
During his 2024 campaign, Trump has pledged tariffs as high as 60% on all Chinese imports and had even floated the idea of revoking China’s Permanent Normal Trade Relations (PNTR) status, which would drastically raise tariffs beyond the existing levels. These have not yet been implemented, but these suggest a potential for further escalation. The only seeming change on China, between Trump 1.0 and Trump 2.0 is with regards to TikTok. Trump’s stance on TikTok seems to have shifted, as he in early 2025 expressed a more pragmatic view, defending the app against a potential US ban, while emphasising trade fairness all the time. However, national security concerns about data collection by Chinese firms remain a flashpoint, with potential restrictions on cloud-based services and algorithms still in play.
While China has promised to retaliate and fight whatever type of war the US wants to, fact also is that the PRC is now reaching out to rivals like India, pushing hard for so-called economic cooperation, something that again is not new. Whenever economic competition between the US and China escalates, Beijing tries to placate other rivals like India and Japan, among others, to try and find markets in these countries, to make up for some of the damage it faces in the American market. While Trump has praised Xi Jinping, his actions in the form of his policies speak louder and the competition is only set to grow soon. Based on their national interests and realities, developing countries must find ways to navigate the competition between the world’s two largest economic powers.
This article is authored by Sriparna Pathak, associate professor, Chinese Studies and International Relations, Jindal School of International Affairs, OP Jindal Global University, Sonipat.
