U.S. Foreign Policy Toward China

Introduction The relationship between the United States and China is the most consequential in the world. The two countries have the largest economies, the biggest defense budgets, and the most advanced AI industries. How Washington handles Beijing shapes global trade, the future of technology, and the risk of war between great powers. From the 1970s until about 2016, U.S. policy tried to bring China into the international system through trade and diplomacy. Since then, both parties have come to treat China as a strategic competitor. The debate now is less about whether to compete than about how. Historical Background U.S. policy toward China has moved through three phases. The first was opening. Nixon's 1972 visit ended decades of isolation, and in 1979 the U.S. formally recognized Beijing while passing the Taiwan Relations Act to keep supporting Taiwan. The second phase was engagement. Trade continued after the 1989 Tiananmen crackdown, and China joined the World Trade Organization in 2001. The bet was that economic growth would make China more open at home and more cooperative abroad. By the mid-2010s, most policymakers believed that bet had failed. China under Xi Jinping grew more centralized and more assertive. The third phase, strategic competition, began with Trump's tariffs in 2018 and continued with Biden's chip restrictions in 2022. It still defines U.S. policy today. Trade and Economics Trade policy has swung from escalation to a managed truce. In 2025, U.S. tariffs on Chinese goods briefly rose above 100 percent, and China retaliated with tariffs of up to 125 percent. In May 2025 the two sides agreed in Geneva to pause. The truce sets U.S. tariffs on Chinese goods at 30 percent and Chinese tariffs on U.S. goods at 10 percent. It has been extended several times, most recently to January 10, 2027. The latest step came from Xi's state visit to Washington in late September 2026. The two governments created a U.S.-China Board of Trade to manage commerce in ordinary, non-sensitive goods. Each side will consider lower tariffs on about $30 billion of the other's imports, from Chinese toys and household goods to American poultry, dairy, and coal. China also pledged to buy at least 10 million metric tons of U.S. coal in both 2027 and 2028. The cuts are modest. Two-way trade fell 25 percent in 2025 to $495 billion, and trade analysts say the new lists barely affect overall flows. The strategy is to build a small zone of stable trade while keeping pressure on strategic sectors. Technology Competition Advanced chips and AI now sit at the center of the rivalry, and U.S. policy on them is divided. Beginning in 2022, the Biden administration restricted exports of top AI chips and chipmaking equipment to China, while the CHIPS and Science Act funded new factories at home. The goal was to keep China a generation behind in computing power. The Trump administration has taken a more transactional approach. In December 2025 it reversed the Biden-era default ban on Nvidia's H200 chip. Sales now require testing in the U.S., face a volume cap, and carry a 25 percent charge paid to the Treasury. Trump presented this as a deal that gives the U.S. a share of the revenue. Congress has pushed back on a bipartisan basis. The proposed AI Overwatch Act would let Congress block chip export licenses and ban sales of chips stronger than the H200. The Remote Access Security Act, which passed the House 369 to 22, would stop Chinese firms from renting U.S. chips in data centers in other countries. A third bill, the MATCH Act, would ban sales of advanced chipmaking equipment to China entirely. Beijing has not simply accepted the chips on offer. It has reportedly limited H200 purchases to protect its own industry, while Huawei and other firms race to build a domestic supply chain. Critics of export controls argue that this push for self-sufficiency is the controls' main unintended result. Security: Taiwan and the South China Sea Taiwan is the most dangerous issue in the relationship, and Beijing calls it the most important. For decades the U.S. has practiced strategic ambiguity. It acknowledges Beijing's view that Taiwan is part of China, does not support Taiwan independence, sells Taiwan defensive weapons, and leaves unclear whether it would fight to defend the island. Pressure on that policy is growing. A U.S. arms package for Taiwan worth about $14 billion awaits final approval, and Trump reportedly held it back to keep the September summit smooth. Xi urged the U.S. to move from not supporting Taiwan independence to actively opposing it. Trump did not accept that change, but he also avoided restating the standard U.S. position, which unsettled Taipei. Meanwhile, Taiwan's legislature passed a $30 billion special defense budget, largely to buy American weapons. The South China Sea is a second flashpoint. During Xi's visit, Chinese ships blocked a Philippine resupply mission to Second Thomas Shoal. Because the U.S. has a defense treaty with the Philippines, these standoffs carry real risk of escalation. Diplomacy and the State of Relations in 2026 Relations in 2026 are defined by frequent summits and a fragile truce. Trump and Xi met in Busan, South Korea, in October 2025, in Beijing in May 2026, and in Washington in September 2026. Trump is expected in Shenzhen for the APEC summit in November, and Xi is expected at the G20 in Miami in December. Fentanyl is the clearest area of cooperation. After the Busan meeting, China restricted exports of chemicals used to make the drug, and the U.S. cut its fentanyl-related tariff from 20 percent to 10 percent. China has since made arrests using U.S. information. The two sides have also launched a dialogue on AI and a communication channel for AI security incidents. Elsewhere, progress is thin. Analysts at CSIS called the September summit heavy on ceremony and light on substance. China's control over rare earth exports remains a major source of leverage, and its pause on rare earth restrictions expires November 10. Human rights did not appear on the agenda, and disagreements over China's support for Russia and Iran remain unresolved. Competing Perspectives Most Americans agree that China is a serious competitor, but they disagree on strategy. Hawks argue that China wants to replace the U.S. as the leading power and that only firm pressure will deter it. They warn that chip sales and summit concessions weaken deterrence and worry allies such as Japan and the Philippines. Dealmakers argue that personal diplomacy and tariff leverage produce concrete wins, and they point to fentanyl cooperation and Chinese purchase pledges. Engagers value economic ties and dialogue as ways to reduce the risk of war, but they want stable rules rather than deals that can reverse overnight. Restrainers argue that U.S. commitments in Asia risk a war over interests that are not vital. Each camp has a point. China has kept pressuring its neighbors during the truce. Tariffs did produce action on fentanyl. Policy swings have hurt U.S. credibility. A war over Taiwan would be catastrophic, though experts disagree on how likely it is. Conclusion U.S. policy toward China in 2026 is best described as managed competition. Washington has traded open confrontation for a truce built on summits, tariff deals, and personal ties between two leaders. That approach has lowered tensions and produced some results, but it has not resolved the core disputes over technology, Taiwan, and trade. The coming months will test the truce. China's pause on rare earth controls ends November 10, and Trump's trip to Shenzhen in November could bring a larger deal. A decision on the Taiwan arms package would test Beijing's response, and Congress may try to override the White House on chip exports. Xi's December visit to Miami and the January 10, 2027 truce deadline follow. Sources CSIS, "Takeaways from the Trump-Xi White House Summit," September 28, 2026. https://www.csis.org/analysis/takeaways-trump-xi-white-house-summit Al Jazeera, "US, China list goods recommended for tariff cuts following Trump-Xi summit," September 28, 2026. https://www.aljazeera.com/economy/2026/9/28/us-china-list-goods-recommended-for-tariff-cuts-following-trump-xi-summit The White House, "U.S.-China Board of Trade," September 27, 2026. https://www.whitehouse.gov/releases/2026/09/u-s-china-board-of-trade/ Washington Times, "U.S. and China agree to reduce tariffs on goods after Xi visit," September 26, 2026. https://www.washingtontimes.com/news/2026/sep/26/us-china-agree-reduce-tariffs-goods-xi-visit/ The Diplomat, "The Trump-Xi Summit Is Over, But Taiwan Is Still Bracing for the Fallout," September 2026. https://thediplomat.com/2026/09/the-trump-xi-summit-is-over-but-taiwan-is-still-bracing-for-the-fallout/ The National, "Trump set for Washington summit with Xi focused on trade, Taiwan and AI," September 21, 2026. https://www.thenationalnews.com/news/us/2026/09/21/trump-set-for-washington-summit-with-xi-focused-on-trade-taiwan-and-ai/ Tech Policy Press, "Technology Restrictions Have Become a Central Instrument of Economic Statecraft," April 13, 2026. https://www.techpolicy.press/technology-restrictions-have-become-a-central-instrument-of-economic-statecraft/