Negotiating to Survive: U.S.-China Relations under Trump 2.0

Since Donald Trump returned to office on January 20, 2025, the global political landscape has felt like a rollercoaster—unpredictable, dramatic, and full of sharp turns. In just five short months, the second Trump administration has already reshaped the structure of international relations, primarily through sweeping tariff policies, aggressive diplomatic rhetoric, and a more intense version of his “America First” approach.

To understand the implications of Trump’s second presidency—especially on U.S.-China relations—it is necessary to examine his broader foreign policy philosophy. Trump’s worldview is firmly rooted in transactionalism: alliances must yield concrete returns, trade must benefit American workers, and military protection must be financially justified.

Trump’s notion of “America First” means that the U.S. should no longer carry what he sees as the burdens of global leadership without measurable gain. His foreign policy rejects traditional multilateralism in favor of short-term deals and direct quid pro quo negotiations.

This approach marks a departure from the decades-long post–Cold War consensus, during which the U.S. pursued global integration through institutions such as the United Nations, the World Trade Organization (WTO), and the International Monetary Fund (IMF). These institutions were designed to reinforce liberal economic norms and security architectures, such as NATO and bilateral defense treaties with Japan, South Korea, and the Philippines.

The U.S. sacrificed some domestic economic advantages, such as allowing trade surpluses from partner nations and offshoring jobs. In exchange it gained strategic influence and long-term international stability.

However, Trump sees these postwar arrangements not as strategic investments but as economic liabilities. From his perspective, the U.S. has allowed other nations to enjoy massive trade surpluses at America’s expense, spent vast sums on foreign defense while allies underinvest, and contributed generously to global organizations that fail to protect and uphold U.S. interests.

For Trump, the costs are no longer justifiable. He questions why American taxpayers should fund NATO while other European nations underperform on their defense obligations, and why the U.S. should continue to absorb cheap goods from China when American industries and workers suffer from job outsourcing and have not been treated fairly when investing in China. These grievances form the foundation of his “America First” doctrine.

Trump’s foreign policy also reflects his identity as a businessman. Every negotiation is a deal; every partner is either a client or a competitor.

His diplomacy is not guided by abstract ideals but by leverage, power, and immediate outcomes. The most prominent tool in his arsenal remains tariffs.

Trump regards tariffs as both a revenue source and a form of political coercion. In early 2025, he reinstated and dramatically increased tariffs on Chinese imports, pushing rates up to 245% at one point.

Trump claimed the high rate was necessary to counter Chinese unfair trade practices, including intellectual property theft, state subsidies, and the production of fentanyl. These tariffs eventually settled at 50% following a midyear agreement between Washington and Beijing, but they still represent a doubling of the pre-2025 average.

Trump’s message is clear. Access to the American market is a privilege that must be earned.

Countries such as Mexico, Canada, and China that heavily depend on the U.S. market have found themselves at the mercy of this new trade logic. Canada and Mexico for example have been pushed to increase enforcement at their borders to prevent drug trafficking and illegal immigration.

Trump has also demanded that both countries crack down on Chinese companies exploiting the provisions of the Agreement between the United States of America, the United Mexican States, and Canada (USMCA) by labeling their exports as North American goods. These demands were reinforced by threats of renewed tariffs, showing Trump’s preference for using economic pressure as leverage for broader geopolitical goals.


China, Trump’s primary geopolitical rival, faces even more intense pressure. As the world’s second-largest economy and a rising military power, China poses what many in Washington see as the most serious long-term threat to American hegemony.

Trump wants Beijing to fully open its markets to American businesses, enforce intellectual property laws, and stop the export of fentanyl precursors. However, the Chinese Communist Party sees full market liberalization as a threat to political stability and party control.

Unsurprisingly, Chinese leaders have resisted negotiations on these issues. Although minor concessions have been made, the broader conflict remains unresolved.

In parallel with economic confrontation, the Trump administration is recalibrating the global security balance. Trump continues to apply pressure on U.S. allies to share more of the burden for their own defense.

Trump has called on NATO countries to increase defense spending, and similar demands have been made to Japan, South Korea, and Taiwan. The logic is that if the U.S. military provides security, its allies must help foot the bill.

The Trump 2.0 administration has strongly encouraged Taiwan to significantly raise its defense budget, up to 10% of GDP, a remarkable demand by global standards. In response, Taiwan is considering multi-billion-dollar arms purchases from the U.S., including advanced missile systems and mobile rocket launchers.

The U.S. has continued arms transfer. However, existing delivery delays from the Department of Defense remain a critical vulnerability for Taiwan’s defense preparedness.

Taiwan is the most critical and most valuable hot potato within the U.S.-China competition. Trump is unlikely to abandon Taiwan, since the security and peace of the first-island chain is critical to U.S. national interests.

However, Trump’s support could be conditional. Taiwan must demonstrate both political loyalty and material investment in its own defense to ensure continued backing from Washington.

Trump may maintain “strategic ambiguity” in official rhetoric, but the substance of his policy reflects strategic calculation. American protection must be earned, not assumed.

Meanwhile, the broader Indo-Pacific region is adjusting to this new reality. Japan has begun increasing its defense spending, though not to the levels Trump desires, while South Korea faces internal political instability, and its policy remains somewhat ambivalent.

Australia has committed to closer U.S. military cooperation through the AUKUS pact, but is hedging its bets by maintaining economic ties with China. Southeast Asian countries, meanwhile, are recalibrating their supply chains and diplomatic strategies to avoid becoming collateral damage in the U.S.-China competition.

To ensure U.S. hegemony, the Trump administration is also focused on “controlled decoupling” from China. This strategy acknowledges the deep economic ties between the two nations but seeks to reduce long-term dependency, particularly in strategic sectors.

American companies have already begun shifting supply chains away from China toward India, Vietnam, and Mexico. This process accelerated after the COVID-19 pandemic, which exposed the vulnerabilities of concentrated manufacturing networks.

The new round of tariffs under Trump 2.0 has intensified this supply chain shift. U.S. imports from China have decreased by nearly 30% compared to the previous year, while consumer prices have increased modestly, a political cost that Trump is attempting to mitigate through pressure on the Federal Reserve to lower interest rates.

Export controls to China have also become more aggressive. The Trump administration has expanded restrictions on high-tech exports, including semiconductors and artificial intelligence (AI) software.

Chinese graduate students in sensitive fields are facing tighter visa scrutiny, and Chinese tech firms linked to military or surveillance activities are now barred from U.S. capital markets.

Meanwhile, sanctions have been imposed on Chinese refineries processing Iranian oil and on entities linked to fentanyl trafficking. These measures reflect a broader effort to contain China’s technological and financial rise, even at the expense of short-term economic pain.

Despite these steps, Trump’s decoupling strategy remains measured and the current administration understands that severing U.S.-China economic ties too abruptly could trigger global market instability. For example, while he initially raised tariffs to extreme levels, Trump later scaled them back in a calculated compromise.

The pattern of tariff escalation followed by partial de-escalation demonstrates Trump’s core belief that pressure must be maintained and calibrated to avoid uncontrollable consequences.

In addition, a complete collapse of the Chinese economy and other intra-party schisms caused by economic problems could lead China to seek war to divert domestic discontent and reconcentrate political power under Xi. The most prominent target is Taiwan, which is a significant part of the United States’ national interest in the region.

It is not in the U.S. strategic interest to trigger a war in the Taiwan Strait and doing so is also fundamentally against the current deterrence strategy against China. Thus, maintaining a controlled decoupling without causing devastating damage to the Chinese economy is the key for the Trump 2.0 Administration.

At present, U.S.-China relations can best be described as a Cold War 2.0, characterized by a competition across economic, technological, military, and ideological fronts. Barring an unlikely reversal by Xi Jinping—such as opening China’s markets or relaxing state control—this contest will likely continue for the foreseeable future.

Xi’s political survival depends on maintaining tight control over economic information, social media, and private enterprise. Liberalization, even in the service of a better relationship with the U.S., risks undermining the Party’s authority.

As such, the most likely trajectory for U.S.-China relations is prolonged strategic competition, punctuated by periods of tension and tactical stabilization. This rivalry will play out across trade disputes, defense posturing, cyber operations, and ideological narratives

Taiwan will remain a central flashpoint. This is not only because of its geographic importance, but also because of its symbolic role in the struggle between liberal democracy and authoritarian governance.

The Trump 2.0 administration’s approach to China is not simply about economic rebalancing or tariff fairness. It is a fundamental redefinition of America’s role in the world.

Trump is dismantling the liberal international order and replacing it with one rooted in transactional realism. For Taiwan and other U.S. partners, this means the rules have changed.

Continued U.S. support will depend less on shared values and more on demonstrable contributions to U.S. interests. Under this emerging doctrine, survival is not guaranteed—it must be negotiated.