- Trump ordered his Pentagon to rewrite its National Defense Strategy after it labeled China the top U.S. security threat; the revised January version instead declares Trump “seeks a stable peace, fair trade, and respectful relations with China” — a seismic reversal from both his first term and the bipartisan consensus of the past decade
- The shift — internally called the “Busan Freeze” after Trump’s October summit with Xi in South Korea — has included pausing tariffs on China’s prized industries, abandoning bans on Chinese security-risk companies, curbing Cybersecurity Agency threat bulletins that named China, waving through Chinese investment with little scrutiny, and allowing Nvidia to sell AI chips to China
- China’s rare-earth export shutdown last April — the first time Beijing had weaponized its near-total control of that supply chain — caught Trump’s team off guard and triggered Treasury Secretary Bessent’s appeal to walk back tariffs; China also helped broker the U.S.-Iran ceasefire this week, further strengthening its negotiating hand
- The U.S. is now expected to go into the May Xi summit seeking large Chinese purchases of soybeans, Boeing aircraft, and American energy — effectively resetting the trade relationship to 2024 status quo, without significant U.S. gains
What Happened?
A sweeping WSJ investigation reveals that the Trump administration has quietly dismantled the confrontational China policy of both its own first term and the broader bipartisan consensus of the past decade. The reversal — which administration insiders call the “Busan Freeze” after Trump’s October summit with Xi Jinping in South Korea — has touched virtually every lever of U.S. China policy. Trump ordered the Pentagon’s National Defense Strategy rewritten to remove China as the primary adversary. Commerce Secretary Howard Lutnick instituted a personal sign-off requirement for any China-related actions, paralyzing enforcement and driving mass staff departures. China hawks in the NSC were fired, the tech and national security directorate was dismantled, and CISA was told not to name China in threat bulletins. Meanwhile, the Committee on Foreign Investment in the U.S. has slowed enforcement so dramatically that lawyers are now advising clients to proceed with China deals because the chances of CFIUS blocking them are negligible.
Why It Matters?
The pivot reflects a significant shift in the underlying power dynamic between Washington and Beijing. China’s decision last April to restrict rare-earth exports — it controls the refining and global export of minerals essential for EVs, missiles, fighter jets, data centers, and submarines — was a genuine shock that caught the Trump team off guard and demonstrated Beijing’s willingness to inflict real economic pain. The Iran war has further weakened the U.S. negotiating position: China helped broker the ceasefire, postponement of the April Xi meeting diminished U.S. leverage, and the administration is now scrambling to prepare concessions for a May summit. The conciliatory approach has had tangible policy consequences: Nvidia can now sell AI chips to China that were previously restricted, TP-Link routers were banned through a face-saving workaround that avoided naming China, and an arms sale to Taiwan was quietly postponed. As one former Biden NSC official put it: “Our lead over China will atrophy. The long-term cost is going to be astronomical.”
What’s Next?
Trump’s May summit with Xi in Beijing is the centerpiece of the current approach — but the deliverables being prepared underscore how much expectations have been reset. The U.S. is expected to ask for large Chinese purchases of soybeans, Boeing aircraft, and American energy: a package that would largely restore the pre-2025 trade status quo without meaningful structural gains. Some China watchers call this a tactical truce rather than a strategic shift, arguing robust competition could resume. But the institutional dismantling — of the NSC’s tech directorate, CFIUS enforcement, export control infrastructure, and interagency China coordination — may prove difficult to rebuild regardless of who sits in the Oval Office next.
Source: The Wall Street Journal
