Why It Matters
The second Trump administration is recalibrating U.S. policy toward China in ways that emphasize trade negotiations and direct leader engagement while maintaining military deterrence in the Indo-Pacific.
President Donald Trump described a pending $14 billion arms sales package to Taiwan as "a very good negotiating chip" with the People's Republic of China following his Beijing summit with Chinese President Xi Jinping, a characterization that has raised concerns among some Members of Congress about U.S. security commitments to Taiwan. Meanwhile, the administration has allowed some advanced technology exports to China that have drawn congressional scrutiny and is pursuing what U.S. Trade Representative Jamieson Greer has described as a "managed trade" approach to the economic relationship.
The Big Picture
The Trump administration has shifted its framing toward seeking a "balance of power" and a "stable peace" with China. The National Security Strategy pledges that the administration will "win the economic future" in Asia, in part through "a genuinely mutually advantageous economic relationship with Beijing." The National Defense Strategy states that "President Trump seeks a stable peace, fair trade, and respectful relations with China." Neither strategy explicitly identifies China as a competitor.
Trump and Xi agreed to "build a constructive relationship of strategic stability" during their May summit in Beijing. At an earlier summit in Busan on Oct. 30, 2025, the two leaders agreed to establish two tracks for ongoing cabinet-level engagement. During the Beijing summit, the United States and China agreed to establish a Board of Trade to manage bilateral trade in non-sensitive goods and a Board of Investment to provide a government-to-government forum for investment issues.
PRC follow-through on tariff and export control agreements has been uneven, and senior-level U.S.-PRC trade talks have expanded into issues including export controls. The administration has allowed Nvidia to export H200 chips to China under an arrangement requiring the U.S. government to collect 25% of proceeds from those sales. The policy has prompted congressional scrutiny and legislative efforts to restrict exports of advanced chips and semiconductor manufacturing equipment to China.
The House reauthorized the Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, and Congress is considering legislation to strengthen export controls and address concerns involving technology competition, data security and ties between the PRC government and Chinese companies. The Consolidated Appropriations Act appropriates not less than $400 million for the Countering PRC Influence Fund.
The Bottom Line
Trump and Xi have agreed to continue direct engagement following their Beijing summit, with Xi expected to make a state visit to the United States this fall. The administration's approach combines continued military deterrence in the Indo-Pacific with expanded leader-level diplomacy and a more managed economic relationship with Beijing.
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