Talking tough about China has been a hallmark of Donald Trump’s political career. But now, with his second administration only days away, he appears to be prioritizing Big Business’s interests in his China policy—even to the possible detriment of U.S. national security.
These are early days, of course, and Trump’s position is subject to change. But the very nature of his political coalition looks likely to prevent him from taking a hard-line approach toward China. The corporate titans in his camp—most of all, Tesla founder Elon Musk—have major financial interests in China. They could try to use their influence to restrain Trump and the China hawks on his team, such as his choice for secretary of state, Marco Rubio, from actions that might threaten those investments.
Striking the right balance between security and business is admittedly tricky. Left to themselves, many American CEOs would likely sell equipment and technology to China, or make investments in Chinese firms, that could help Beijing upgrade its military capabilities and high-tech industries. In trying to prevent this, Washington could wind up depriving U.S. companies of innocuous opportunities in the world’s second-largest economy. President Joe Biden attempted to resolve this dilemma by putting some restrictions on American companies’ interactions and investments in China, but specifically targeting the technologies that are most vital to U.S. security, such as advanced chips and artificial intelligence.
Key Republicans around Trump seem to believe that these curbs went too far. Last month, amid the late scramble to avert a government shutdown, House Republicans dropped a provision from the spending bill that aimed to toughen restrictions on U.S. investment in China. Jim McGovern, a Democratic representative, asserted that Musk used his influence to scuttle the original budget deal in order to get that China provision excised. Musk “got what he wanted,” McGovern posted on X. “The ability to sell out the U.S. so he could make money in China.” Whether or not that was Musk’s intent—he criticized the House for spending too much—the provision’s removal cleared a potential hurdle for U.S. companies that want to expand their investments in China.
That decision is part of a pattern. A week later, Trump asked the Supreme Court to stop the impending ban on the Chinese-owned social-media platform TikTok. Congress had passed a law mandating the ban in 2024, out of concern that the Chinese government could pressure the app’s Beijing-based parent company, ByteDance, to cough up the data it collects about American citizens. The law gave ByteDance a chance to save TikTok by divesting its stake in the app, but that never happened. As president in 2020, Trump similarly sought to ban TikTok or force ByteDance to sell the app’s U.S. business. Now Trump’s legal team suggests that shutting down TikTok would infringe on free speech.
But the flip-flop may be motivated by a less idealistic purpose. Perhaps Trump now sees TikTok as a valuable tool for self-promotion. More ominous, Trump’s TikTok turnaround (at least in public) happened to coincide with a meeting he had with a billionaire donor early last year: Jeff Yass is the co-founder of a financial firm, Susquehanna International Group, that is a shareholder in ByteDance and stands to lose from a TikTok ban. Trump has said that the two men didn’t discuss the company.
Democratic Representative Raja Krishnamoorthi, a co-author of the TikTok bill, suggested to me that he does not think such concerns are unrelated to Trump’s change of heart. “My Republican colleagues tell me it’s because of one or two donors on his side who have basically tried to persuade him to undo the law,” Krishnamoorthi said. But he noted that the only way Trump can unwind the legislation is to “come back to Congress,” where the law was approved with bipartisan support.
Trump appears to be watering down his plan for tariffs on China as well. During the presidential campaign, he pledged to impose duties of 50 percent on Chinese imports. Shortly after the election in November, he changed that to 10 percent, presumably on top of existing tariffs. This reduction (if it is indeed Trump’s final plan) would benefit the American economy. The extremely high duty Trump originally proposed would have wreaked havoc on supply chains and raised prices on everyday necessities for American households, given how many of these the United States still imports from China. And if Trump slaps higher tariffs on other countries that produce low-cost imports—say, Mexico—he may actually help China, because U.S. companies will choose to keep their manufacturing there instead.
Chinese leaders have been trying to woo wary American investors back into Beijing’s struggling economy, and they would surely welcome a softer stance from Washington. For his part, Trump seems to believe that he can work with Chinese leader Xi Jinping. He even invited Xi to his inauguration (Xi is not expected to attend but may send a high-level envoy to represent him). Earlier this month, Trump said that the two are already communicating through their aides (China’s Foreign Ministry did not confirm this).
Trump’s apparent softening puts U.S. interests at risk. Relations between the United States and China have deteriorated since Trump left the White House in 2021; Xi has become even more hostile toward Washington, and he is unlikely to waver from economic, security, and foreign policies designed to counter American global power. Among these are enormous government subsidies to Chinese industry and efforts to undermine the current world order. In a speech published in a recent issue of the Chinese Communist Party’s top ideological journal, Xi expressed his contempt for the West in especially harsh terms: “Many Western countries find themselves increasingly in difficulty, largely because they cannot curb the greedy nature of capital or address the deep-rooted maladies of materialism and spiritual emptiness,” Xi said.
The timing of the speech’s publication—two years after Xi delivered it and three weeks before Trump’s inauguration—could be a warning to the incoming president. Xi may be more implacable and willing to retaliate against Trump this time around. “History has repeatedly proven that striving for security through struggle brings genuine security, while seeking security through weakness and concession ultimately leads to insecurity,” he said in the speech.
American tycoons, including Musk, could become Xi’s targets. When Trump imposed tariffs on China during his first administration, Beijing generally limited its response to tit-for-tat duties and curbs on U.S. imports. Now the Chinese government is signaling that it could go after American companies more aggressively. In December, Chinese authorities launched an antitrust probe into the U.S. AI chip giant Nvidia. Three months earlier, China’s Commerce Ministry threatened to bar PVH, which owns the Calvin Klein and Tommy Hilfiger brands, from doing business in the country. The American apparel firm had offended Beijing by abiding by a U.S. regulation—one that prohibits importing cotton from the Xinjiang region, where China is alleged to be using forced labor.
Tesla could easily be next. Musk and other business leaders know this and may see it as a reason to press Trump to go easy on China. But what’s good for profits could be bad for national security and undermine America’s technological advantage. An incoming U.S. president who puts his rich backers above the national interest would surely prove Xi correct about American greed causing American decline.
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