The US-China trade war seems to have subsided – but the sense of calm is misleading
The US-China trade war may have faded from headlines, but a new economic conflict is brewing over control of critical supply chains essential to technological and military supremacy.
The US-China trade war may have faded from headlines, but a new economic conflict is brewing over control of critical supply chains essential to technological and military supremacy. While the truce reached last year has temporarily halted tit-for-tat tariffs, neither country has established mutual assurances to prevent new hostilities in a standoff both sides have defined as a national security priority.
New arms race
The new arms race differs from historical conflicts, with China and the US focusing on ensuring resilience in international supply chains and developing ways to constrain their rival's economic progress. China's Xi Jinping has called for tightening international production chains' dependence on China as a deterrent against foreign supply cuts.
tighten international production chains' dependence on China, forming a powerful countermeasure and deterrent capability against foreigners who would artificially cut off supply
Escalating restrictions
American restrictions on tech exports, investments and transfers to China have proliferated over the past five years, not only impacting China's military capabilities but also slowing its broader technological progress. Trump's tariffs have further complicated the economic landscape.
China has responded by leveraging its dominance over critical minerals essential to high-tech industries. Last year, it stunned the Trump administration by throttling rare earth exports and magnets in retaliation against US efforts to restrict China's access to semiconductors and lithography machines.
The International Energy Agency estimates that if China were to block the US and Europe's access to rare earth magnets, it could cost their economies about $1.5tn per year.
Future conflict
The Trump administration is investing hundreds of millions into projects to mine and process rare earths while doubling down on efforts to limit China's access to frontier semiconductors. China has announced restrictions on AI chips and solar power technology, threatening to punish countries reducing dependence on its minerals.
Historical precedents suggest the stakes are dangerously high, similar to how resource constraints contributed to conflicts like Japan's attack on Pearl Harbor. As China and the US fight over control of next-generation technology, trade has become a theater of war rather than a tool for peace.
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