I. Introduction
Former President Donald Trump was sworn in as the 47th president of the United States on January 20, 2025. During his first term in office from January 2017 to January 2021, he implemented a significant shift in U.S. policy toward China, moving from a previous stance of "engagement" to one of "strategic competition." Trump adopted a hard-line approach in various areas, including the economy, technology, and security, with the goal of decoupling from China. His administration imposed numerous restrictions on trade, investment, and technology transfer with China, many of which have been maintained by the Biden administration. As Trump begins his second term, his China policy is now drawing considerable attention and speculation regarding its potential direction and impact.
The new administration’s economic policies toward China are likely to include the revocation of China's most-favored-nation status, imposing high tariffs on imports from China, blocking the import of Chinese-made automobiles, and restricting technology transfers and investments by U.S. companies to China. The goal is not only to decouple from China but to revitalize American manufacturing.
On the geopolitical front, the United States is expected to strengthen its alliances in the Indo-Pacific region and adopt a more confrontational stance against Chinese military activities. This will likely increase tensions in the South China Sea and the Taiwan Strait, and the risk of military conflict between the United States and China. In addition, the new administration has declared its intention for the United States to withdraw from the Paris Agreement, which could hinder cooperation between the United States and China on climate change.
The Trump administration's second term policy toward China is led by hardliners, including Secretary of State Marco Rubio and National Security Adviser Mike Waltz. Both share basic views with Trump, but are likely to take a more proactive stance in building relations with allies and fostering multilateral cooperation.
In response to an expected offensive from the Trump administration in its second term, China is pursuing a “dual circulation” strategy, aimed at expanding domestic demand and achieving scientific and technological self-sufficiency. China is also strengthening its ties with the Global South and promoting the internationalization of the renminbi in an effort to maintain its international influence. However, these measures may aggravate the decoupling between the United States and China.
II. China policy as seen in the Republican Party's 2024 platform
The Trump administration's China policy for its second term can be inferred from the 2024 Republican Party policy platform.
The Republican Party has indicated that, in order to decouple the United States from China, it will first revoke China's "most favored nation" status and gradually phase out the import of essential goods. It also aims to ensure strategic independence by blocking Chinese companies from investing in U.S. real estate and industry. Additionally, as part of their "America First" economic agenda, Republicans have put forward plans to encourage U.S. companies to retreat from China and bring critical supply chains back home. The aim is to strengthen national security while creating jobs and improving wages. In particular, reviving the defense industry has been made a priority, with an emphasis on ensuring that equipment and parts necessary for U.S. security are manufactured domestically.
On the foreign policy front, Republicans have called for strengthening alliances in the Indo-Pacific region as a way to counter growing Chinese influence. They also emphasize the need to strengthen the economic, military and diplomatic capabilities of the United States, and to defend American values and its way of life. These policies are aimed at maintaining US economic and military superiority and containing Chinese influence.
III. China-related economic policy is the cornerstone of trade policy
The Republican Party's policy platform lists the following as its trade policy goals: "rebalance trade," "save the U.S. auto industry," "bring home critical supply chains," "buy American and hire American," "become the manufacturing superpower," and "secure strategic independence from China" (Figure 1). Economic policy toward China is framed not only as a means to secure strategic independence from China but also as a way to achieve various other trade policy objectives.
(Source) The Republican National Committee, “2024 GOP Platform: Make America Great Again,” (Chapter 5: Protect American Workers and Farmers from Unfair Trade), July 8, 2024
＜https://prod-static.gop.com/media/RNC2024-Platform.pdf＞
Based on Trump's comments during the election campaign, the new administration's economic policy toward China is likely to include the following specific items:
First, it aims to revoke China's most-favored-nation status and impose a minimum tariff of 60% on all imports from China. Shortly after his inauguration, President Trump signed an executive order imposing an additional 10% tariff on imports from China, which took effect on February 4, 2025. This would make Chinese products more expensive for American consumers while enhancing the competitiveness of domestic industries. To stimulate demand for U.S. products and revitalize the domestic economy, the administration may also implement a uniform baseline tariff of 10% to 20% on imports from countries other than China.
It will also block the import of Chinese-made cars. The aim is to protect the U.S. auto industry and preserve jobs.
Additionally, it will phase out imports of essential goods such as electronics, steel and medicines from China over a four-year period. Through this, the aim is to encourage the restructuring of supply chains and ensure that essential goods are produced domestically.
It will also place tough new restrictions on Chinese investment in U.S. assets, particularly in sectors such as energy, technology, communications, farmland, natural resources and medical supplies. The aim is to ensure national security and reduce China's influence.
The policy will restrict investment by U.S. companies in China. The aim is to prevent American technology and capital from flowing to China and keep jobs domestic.
Finally, federal contracts with companies that outsource to China will be cancelled. This will protect jobs in the United States and reduce their reliance on China.
IV. U.S.-China maneuvering over the Taiwan issue
During the second term of the Trump administration, the Taiwan issue is expected to become a key focus in U.S.-China relations. In an interview with Bloomberg Businessweek during his election campaign, Trump argued that Taiwan should contribute to the costs of U.S. protection against a potential invasion from the mainland, likening the United States to an insurance company and asserting that Taiwan was not paying its fair share of premiums. These comments align with his ongoing call for shared responsibility among allies and suggest a willingness to rethink relations with Taiwan rooted in the 'America First' ideology and a transactional approach to diplomacy (Note 1).
In this context, the situation surrounding Taiwan is likely to change in the following ways during Trump’s second term:
First, the administration is expected to demand that Taiwan significantly increase its defense spending, which Taiwan may feel compelled to comply with.
Additionally, Trump believes that Taiwan’s semiconductor industry undermines U.S. interests, prompting a reassessment of U.S.-Taiwan cooperation in this sector. It is likely that the United States will urge Taiwanese semiconductor companies, including Taiwan Semiconductor Manufacturing Co. (TSMC), to expand production in the U.S. and transfer technology.
Moreover, there is a strong possibility that the Taiwan issue will be leveraged as a bargaining chip in U.S.-China relations. Depending on China's proposals, the scenario could emerge in which the United States may reconsider its defense commitments to Taiwan. This uncertainty regarding U.S. support could destabilize the situation in the Taiwan Strait, potentially encouraging China to increase pressure on Taiwan, while Taiwan may focus more on bolstering its own defense capabilities.
V. Fading collaboration on climate change between the U.S. and China
Amid the intensifying conflict between the United States and China, climate change measures have been one of the few areas of cooperation between the United States and China under the Biden administration. However, maintaining a cooperative relationship is likely to become more difficult under the second Trump administration. The Republican policy platform clearly incudes policies that are counter to climate change measures, such as "lifting restrictions on American energy production," "ending market-distorting restrictions on oil, natural gas, and coal," and "cancelling Biden's electric vehicle and other mandates." On the first day of his second term, President Trump announced once again that the U.S. would withdraw from the Paris Agreement on climate change, as he had during his first term.
On the other hand, China, as the world's largest emitter of greenhouse gases, has been actively working to combat climate change in recent years. Trump's passive stance on climate change could isolate the United States internationally, presenting China with an opportunity to strengthen its international leadership in the field of climate change. This will likely provide China with an advantage, especially in its relations with developing countries, which are particularly vulnerable to the effects of climate change. If the United States and China are at odds rather than cooperating on climate change, this could lead to a major setback in international efforts to combat climate change.
Moreover, the Trump administration's passive approach to climate change is likely to allow China to gain an early lead in renewable energy and environmental technologies, putting the United States at risk of falling behind in gaining market share and in technological innovation in these fast-growing markets. This could result in lost investment and job opportunities, weakened international influence, and a decline in economic competitiveness in the long term.
VI. Hardliners on China in charge of foreign and security policy
In the Trump administration's second term, China policy is being handled by hardliners, such as Secretary of State Marco Rubio (formerly a senator from Florida) and National Security Advisor Mike Waltz (formerly a congressman from Florida).
Marco Rubio is known as the "vanguard of the anti-China movement." In terms of technology and economic policy, he is promoting stronger regulations on Chinese companies such as Huawei and TikTok, emphasizing decoupling of supply chains from China and the tightening of listing standards for Chinese companies. He is a strong advocate for breaking away from dependence on China in key technology areas. Regarding human rights issues, he led the way in introducing sanctions legislation regarding the human rights situation in the Xinjiang Uighur Autonomous Region, supports the pro-democracy movement in Hong Kong, and is working to impose stricter regulations on Confucius Institutes while taking measures to counter China's growing influence. In regional security, he has called for greater support for Taiwan, stronger alliances in the Indo-Pacific, and has proposed specific sanctions in response to China's actions in the South China Sea. Due to these activities, Marco Rubio was targeted by China for sanctions in 2020, including a ban on entering China.
Mike Waltz also describes China as America's greatest geopolitical competitor and advocates a tough response on both the security and economic fronts. He is particularly wary of the expanding influence of the Chinese Communist Party and has called for coordinated action with allied nations.
Many of the senior officials supporting the Trump administration in its second term share Trump's basic views on China policy, but are showing a more proactive stance on building relationships with allies and multilateral cooperation. This is expected to put brakes on Trump's inclination toward unilateral action.
VII. Anticipated changes in U.S.-China relations
Given the policy direction of the Trump administration's second term that has been made clear to this point, various changes are expected in U.S.-China relations in economic, technological, geopolitical, military, and ideological spheres.
First, the withdrawal of most-favored-nation status by the United States and the increase in tariffs on China will likely invite corresponding retaliatory measures from China. As the economic conflict between the two countries intensifies, multinationals will relocate production bases from China to the United States or friendly countries, leading to a global restructuring of supply chains. This will only accelerate the decoupling between the United States and China. China may try to offset the impact of higher U.S. tariffs on its exports by devaluing the yuan, but this could lead to the U.S. Treasury Department labelling it a "currency manipulator" and subjecting it to new sanctions.
There are also concerns about intensifying competition for technological supremacy. Due to the Trump administration's policy of emphasizing strategic independence from China, competition in advanced technology fields such as 5G, semiconductors, and AI is expected to intensify further. This is likely to lead to further restrictions on technology transfer and investment regulations for Chinese companies.
In addition, geopolitical and military tensions are expected to increase. The United States is likely to strengthen its cooperation with regional partners and adopt a stronger stance against Chinese military activities. In particular, strengthening alliances in the Indo-Pacific region will likely increase tensions in the South China Sea and the Taiwan Strait. As the United States strengthens its military capabilities and revives its defense industrial base, this could lead to deeper military conflict between the United States and China and raise concerns about freedom of navigation and regional security.
Finally, the deepening ideological conflict is a concern. The Trump administration's "America First" stance could further deepen conflict with China's values and political system. Although Trump may have less interest in China's human rights issues, he could potentially use this as leverage in negotiations with China. This could further weaken trust between the two countries and make future dialogue and cooperation even less likely.
VIII. China prepares for further decoupling
In response to the expected offensive from the Trump administration in its second term, China is pursuing its "dual circulation" strategy which focuses on "domestic circulation as the main focus, with the mutual promotion of both domestic and international circulations." The dual circulation strategy consists of the following four pillars:
The first pillar is the expansion of domestic demand. China is working on strengthening domestic markets by promoting consumption, while also focusing on reducing its reliance on external demand. The key to the success of this strategy is the creation of a " unified national market" that aims to reduce income disparities between high-income and low-income groups, between urban and rural areas, and between regions, and to eliminate regional protectionism that has caused market fragmentation.
The second pillar is the promotion of "new-quality productive forces" to strengthen self-reliance in science and technology and the domestic supply chain. To achieve this, the country is working to improve self-sufficiency in semiconductor manufacturing and is expanding research and development investments in cutting-edge fields such as AI and quantum computers. At the same time, China is creating stockpiles of food, energy, and critical mineral resources, and working to rebuild stable supply chains (Note 2).
The third pillar is strengthening ties with the Global South. China is working to diversify its export markets and strengthen relationships with emerging markets in what has become known as the Global South, which includes Southeast Asia, South Asia, the Middle East, Africa and Latin American. In particular, through the Regional Comprehensive Economic Partnership (RCEP) agreement and the Belt and Road Initiative, China aims to expand economic ties with countries beyond the United States and to reduce its excessive reliance on the U.S. market.
The final pillar is promoting the internationalization of the renminbi in preparation for U.S.-China decoupling and U.S. financial sanctions. Specifically, it aims to expand yuan-denominated transactions with the Global South and build alternative infrastructure in the international payment system to mitigate geopolitical risks and ensure financial independence.
Such measures are expected to have the effect of mitigating the impact of U.S.-China decoupling, but there is also a risk that they may further aggravate the process. As a result, there is an increasing risk that the global economy will be divided into two blocs centered on the two superpowers, the United States and China.
First published in Japanese on January 7, 2025. English version updated on February 7, 2025.
