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Abishur Prakash

In August, when US Treasury Secretary Scott Bessent said that the American and Chinese trade teams would meet in two to three months, a huge gap between talks, the prognosis for US-China relations was not positive. Now, as China moves on multiple fronts at once, the prognosis appears to be terminal.
With US President Donald Trump threatening an additional 100 per cent tariff in November, the writing is on the wall: US-China talks have failed. The rapprochement is over. From Beijing’s perspective, its moves might be a defensive response to mounting US pressure, not a first strike.
The breakdown has been building for some time, in particular as the US and China were unable to reach a soybean deal and as Washington pressured allies from Europe to Asia to limit their trade with China. Even then, there were still some bright spots: a TikTok framework deal and the United States restarting the export of jet engines, AI chips and critical software.
All of this was short-lived. The US and China are quickly returning to their positions in April. As Beijing raises the heat, the question is not what happened, but what China is doing? Anyone thinking about what happens next should read China’s moves very carefully. They signal where China is at and the possibilities for which it is preparing.
First, China is making it clear it is ready to fight with the US with no clear off-ramp. There are three parts to this calculation: China’s ability to meet the US “on the field” (i.e., the US raises tariffs, China cuts American chips), the Chinese belief that when America swings at China, it will end up hurting itself (i.e., farmers in the US angry at Trump over the China fight) and the unique levers China can pull to retaliate directly (i.e., expanded rare earth export controls). Beijing believes it can weather a storm that is increasingly guaranteed to strike.
Second, China is signalling that its reliance on the US is no longer what it once was. As the US continues to restrict Chinese vehicles, the largest market for BYD outside China is the UK, where sales are up 880 per cent year on year. In the first half of 2025, Chinese clothing exports to Europe surged 20 per cent as the de minimis exemption disappeared in the US. The latest crackdown on Nvidia chips at Chinese ports further reflects China’s new belief that dependency does not mean defeat.

Third, China is warning that its retaliation will cause the US and others to suffer. The new antitrust investigation into Qualcomm, for example, is a warning shot to the entire Western business community that they could be collateral in a renewed US-China stand-off. China’s discussions over restarting rare earth exports to India as long as New Delhi does not re-export them to the US show how Beijing is becoming selective with trade.
Underpinning all this is a far bigger shift. It is no coincidence that China has taken such bold action weeks before a potential meeting between Trump and President Xi Jinping at the Asia-Pacific Economic Cooperation summit in South Korea. A year ago, China would not have rocked the boat, but today it is disruption first and discussion second. Is China unveiling a new geopolitical strategy as Trump upends the global order?
At the centre of this new strategy is collision and defiance instead of capitulation and deference. If the US and China return to clashing, the future becomes even more uncertain. Other flashpoints could be drawn into this fight, compounding challenges and forcing the world to pick sides. Two in particular stand out.


The first has to do with Taiwan. The US-Taiwan relationship has entered unfamiliar waters, as Washington proposes that Taipei manufacture half its chips in the US for continued protection. Taiwan has flatly rejected this, but in an environment where Washington and Beijng are colliding, Trump could embrace Taiwan on a scale unseen before.
The second has to do with Russia. So far, the US has largely looked the other way on China’s trade with Russia, going after India instead. However, Trump could soon use the war in Ukraine to take new action against Beijing. Part of this could include prodding US allies, as Trump has already demanded that Europe impose tariffs of 100 per cent on both India and China.
The US-China relationship almost tumbled off a cliff in April, and now it is back on the edge. There is a small window of opportunity in which to change course, but even if this happens, it will not hide the reality that the chasms between the two are too wide to overcome.


Even more significant is the evolving basis of the relationship. The US and China once clashed before talks, but now they could clash knowing talks have failed. This is a very different vantage point from which to enter a fight, making it more zero-sum.
China has made it clear its patience is at an end. Diplomacy and restraint have limits, and now China’s biggest test is about to begin. Can it deal with the consequences of the door it has opened?
Also, how far is each side willing to go to hurt the other? Tariffs and export controls gave pause before, but now they are the starting point. The US and China will have to swing bigger and get bloodier to convince the other side to stop.


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Opinion

World Opinion

News

Economy, Trade & Business

Even if the US and China can step back from the brink again, it is clear the differences between them now are too wide to overcome


Even if the US and China can step back from the brink again, it is clear the differences between them now are too wide to overcome.


US-China decoupling

US-China trade war

Donald Trump’s China policy

China

Russia

United States

Taiwan

Donald Trump

Scott Bessent

Qualcomm

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


3 signs China’s patience with Trump is at an end

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Even if the US and China can step back from the brink again, it is clear the differences between them now are too wide to overcome

Even if the US and China can step back from the brink again, it is clear the differences between them now are too wide to overcome