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Predicting the incoming Trump administration’s China policy—and China’s likely response—is a guessing game. In his first term as president, Donald Trump’s transactional approach often

differed from his team’s competitive approach. Those contrasting impulses will define his second term. But despite the uncertainty surrounding the Trump administration’s approach, the

central challenge it faces is clear: positioning the United States to outcompete China as a critical window in the competition begins to close. Early in the Biden administration, senior

officials got together, read the intelligence, and concluded that the 2020s would be the decisive decade in U.S. competition with China. Without corrective action, the United States faced a

growing risk of being surpassed by China technologically, dependent on it economically, and defeated militarily in the South China Sea or the Taiwan Strait. The new Trump team will take the

United States through the second half of the decisive decade. There is much to be done. Trump’s national security picks, particularly Mike Waltz as national security adviser, Marco Rubio as

secretary of state, and Elise Stefanik as ambassador to the United Nations, understand the task ahead and have views consistent with a growing bipartisan consensus on the need to outcompete

China. Their most significant obstacle in carrying out a competitive approach may be Trump’s own penchant for dealmaking, transactionalism, and flattery toward President Xi Jinping, which

sometimes undercut his staff’s more hard-line approaches, including the expansion of export controls and a vocal defense of human rights, among other measures, the first time around. If

Trump’s new team can overcome that challenge, they will have an opportunity to improve America’s competitive position. Closing the gap during the decisive decade may call for building on the

work of President Joe Biden, just as the Biden team built on the work of the Trump administration. The Biden administration focused on rebuilding American strength by focusing on its

foundations at home and its relationships with partners abroad, an approach summed up in its “invest, align, compete” tagline. That formula can also serve as a way to fulfill the Trump

administration’s vision of “peace through strength.” But rebuilding American power will require the Trump administration to undertake new efforts, too, that depend on bipartisan

congressional support and the buy-in of the American public. STRENGTH STARTS AT HOME Some of the most urgent questions about U.S. China policy turn on questions about domestic policy, which

provides the basis for American strength. But the foundations of that strength have atrophied, especially since the end of the Cold War. The administration will need to undertake significant

structural reforms to remedy these weaknesses. The United States needs to fix its defense industrial base to rapidly deter China and, if necessary, defeat it in a potential conflict. At

present, the United States would expend all its munitions within a week of sustained fighting and would struggle to rebuild surface vessels after they were sunk, with a national shipbuilding

capacity less than that of one of China’s larger shipyards. The Trump administration must focus on making progress on two timelines: the two-year problem of fielding more uncrewed systems

and cruise and ballistic missiles in the Indo-Pacific, as well as the five-to-ten-year problem of revitalizing the United States’ shipbuilding industry, which has been declining for decades

without an adequate commercial sector to keep it viable. Washington also needs to protect its critical infrastructure from cyberattack. China has compromised U.S. critical infrastructure on

which millions of Americans rely, including water and gas, transportation, and telecommunications systems, with the aim of inciting chaos, sowing panic, and reducing U.S. will in a conflict

scenario. As it invests in offensive capabilities, the Trump administration will also need to bolster American defenses through a combination of regulatory measures, new legislation holding

companies accountable for lackluster cyberdefenses, and novel technical efforts that can complicate the abilities of bad actors to penetrate U.S. networks. > The United States needs to 

fix its defense industrial base to > rapidly deter China and, if necessary, defeat it in a potential > conflict. Finally, the United States needs to invest in reindustrialization and

technological leadership. China already accounts for more than 30 percent of global manufacturing, can innovate successfully, increasingly leads in the sectors of tomorrow, and is

redirecting massive amounts of capital into manufacturing as its housing market stagnates. The result, a second “China shock” akin to the one that flooded U.S. markets with cheap Chinese

goods at the beginning of this century, will threaten the United States’ future as an industrial power and leave it more dependent on China than China is on the United States. Addressing

this problem will require not only tariffs but also industrial policies to stimulate manufacturing and high-tech industry and coordination with allies and partners. Punitive measures

directed at allies, such as tariffs, will complicate the United States’ ability to enlist them in efforts to protect against China’s excess capacity. To advance this domestic agenda, the

Trump administration cannot rely only on executive branch authorities. It will need significant bipartisan congressional support. The Biden administration approached some major domestic

initiatives in this fashion, including through its infrastructure bill and the CHIPS and Science Act, and the Trump administration could do the same. The Trump administration will also need

to mobilize the American public. Since the 9/11 attacks in 2001, every American president has given a primetime address from the Oval Office on some aspect of Middle East policy. None have

done so on China. Trump may consider an address to the nation on China policy, but how he frames the nature of the competition with China will matter more than whether he delivers such a

speech. With a clear-eyed but not demagogic tone, stressing competition but not necessarily confrontation, and linking competition with China directly to the interests of Americans, Trump

could rally the American public, civil society, academia, and the corporate sector behind the administration’s efforts. STRENGTH IN NUMBERS The China challenge is in part about scale. China

is four times the size of the United States in population. It is the world’s leading industrial state and the largest trading partner of over 100 countries. For the United States to compete,

it needs to achieve scale of its own. The best path to rivaling China’s size will run through allies and partners. American strength flows from the country’s rich network of alliances and

partnerships. In addition to fixing structural problems at home, the Trump administration will need to deepen its coordination with friendly countries in two key areas: economics and

technology, and security. To avoid a second China shock and create conditions conducive to reindustrialization, the administration will need to pool allies’ and partners’ markets and align

with them on tariff and regulatory approaches that protect Western industry. And to retain leadership in technology, it will need to cooperate on export controls to prevent sensitive

technology from falling into China’s hands. To deter China’s aggression in the Taiwan Strait or the South China Sea, the Trump administration should build on the Biden administration’s

collaborative successes in the region, which included AUKUS, a trilateral security partnership to provide Australia with nuclear submarine capability; the Quad, which brought the United

States, Australia, India, and Japan together; and efforts to diversify the footprint of U.S. military forces across Australia, Japan, Papua New Guinea, the Philippines, and elsewhere. The

latter measure blunted the risk China’s missile systems pose to U.S. forces near China and allowed the United States to operate more flexibly and resiliently. Deterrence also calls for

providing allies and partners with asymmetric capabilities through arms sales and by positioning U.S. capabilities on their soil, as the United States recently did by deploying the Typhon

missile system in the Philippines, in order to create costs for Chinese aggression. And finally, it almost certainly will require working with allies and partners to increase the economic

and political costs for China’s adventurism in Asia, including through coordinated sanctions and statements in response to Chinese military activity. None of these steps are possible if the

United States goes it alone. Whether the Trump administration is able to achieve cooperation on these priorities depends on how they approach allies and partners. European leaders, for good

reason, fear that Trump will levy tariffs on European countries’ economies, cut military assistance to Ukraine, pressure Europe to increase defense spending, and possibly pursue its own form

of détente with Russia in the hope that increased U.S. engagement could weaken the Chinese-Russian relationship. Administration officials should use their leverage over European countries

to bring about a broader realignment in the transatlantic relationship, one that ensures that Europe bolsters its defenses, increases support for Ukraine, and imposes tougher economic and

technological measures on China, such as on export controls, in coordination with the United States. This approach would be wiser than pushing for a package of immediate and flashy

short-term concessions that would damage alliances without realigning them meaningfully. Similarly, in Asia, Trump’s first-term threats to withdraw U.S. troops from allied countries, demand

more payment for U.S. bases, or abandon U.S. defense commitments were grounded in real U.S. leverage. But they ignored the fact that American allies in the region must attend to their own

domestic political situations, in which voters often react negatively to public pressure from the United States. A subtle approach to enlist them in the administration’s China strategy will

be more effective. THREATS, BLUFFS, AND PROMISES Beijing, for its part, is already taking steps to prepare for the incoming administration. It is deeply concerned about Trump’s threat to

levy 60 percent tariffs on Chinese goods and has already signaled it is prepared to retaliate with tariffs, export controls, and sanctions of its own, as well as crackdowns on U.S. companies

operating in China. If Chinese officials believe retaliation will provoke further escalation from Trump, they may be restrained, mirroring their behavior in the trade war during Trump’s

first term. If they believe, however, that retaliation may cause the Trump administration to back down for fear of rising inflation or risks to key American companies, then they are more

likely to respond forcefully, perhaps even seeking to escalate to de-escalate, a tactic previewed by Beijing in its targeting of Micron, an American semiconductor manufacturer, and its

recent use of export controls on rare earth elements in response to U.S. export controls. But there is a third possibility: if Trump levies a 60 percent tariff early in his presidency and

shows limited interest in negotiation, and China concludes that the risks to its economy (and Xi’s reputation) are existential and intolerable, then Beijing may have no choice but to respond

forcefully, regardless of the expected American response. It’s unclear whether the Trump administration’s tariff threat is a negotiating tactic intended to achieve a change in China’s

behavior, a nonnegotiable U.S. policy intended to achieve decoupling, or a mix of both. For Beijing, the best outcome may be to hope for the former and, through a mixture of retaliation and

personal diplomacy, push for a bargain that might include trade, technology, and even counternarcotics measures. To increase the odds of such an outcome, Beijing may initially retaliate

against companies with close ties to Trump, including Elon Musk’s Tesla, in order to incentivize de-escalation. Chinese officials may also seek to split Trump from his more hard-line staff

and play to his direct self-interest, as they did in negotiations following the start of the U.S.-Chinese trade war during his first term. Their strategy resulted in Trump downplaying

China’s crackdown against protesters in Hong Kong, expressing support for its internment camps in Xinjiang, offering to lift export controls on Huawei and ZTE, and even accepting a trade

deal that did not address China’s industrial policy practices. Given this history, the possibility that Beijing suggests a grand bargain to Trump in which semiconductor export controls and

other would-be nonnegotiable U.S. policies, potentially including U.S. Taiwan policy, are negotiated directly with Beijing should particularly concern the administration’s more competitively

inclined staff. Such a proposal should be rejected. The smartest path forward for the Trump administration on tariffs may be to “boil the frog” by gradually increasing—or threatening to

increase—tariffs, rather than levying them all immediately. This approach would complicate Beijing’s ability to respond forcefully and to accuse the United States of being the sole

disruptive force in the trading system. It would give U.S. and foreign companies time to adjust. And it might allow the United States to extract meaningful concessions from Beijing by giving

Chinese leaders the political space to work toward a deal rather than immediately backing them into a corner and forcing them to retaliate. Beyond the trade war, Beijing will seek to

present itself as a global leader and portray the United States as a country hurtling into decline. Seven years ago, in response to Trump’s first election, Xi tried to position China as a

defender of globalization at Davos, declaring that “any attempt to cut off the flow of capital, technologies, products, industries, and people between economies . . . runs counter to the

historical trend.” A trade war offers another such opportunity. But this time, in addition to claiming the mantle of defender of the global economic system, Xi may aim to position China,

however implausibly, as a mediating party to the current conflicts in the Middle East and Europe. > Beijing, for its part, is already taking steps to prepare for the > incoming 

administration. Beijing also believes that tensions with the Trump administration will require mending fences with other great powers. It has increased diplomatic engagement with Europe and

Japan and pursued a border de-escalation arrangement with India. China is working to improve ties to U.S. allies and partners, not simply to reduce pressure on itself but also to provide an

alternative to which these countries could turn if they consider Washington’s approach to be overly punitive. Beijing sees the United States’ network of alliances as Washington’s key

advantage in geopolitical competition, and it hopes that a second Trump administration that damages those partnerships—as the first did—may create openings. Trump, then, should not to play

into Beijing’s hand in this way. How the Trump administration will structure bilateral diplomacy with China remains an open question. The most effective lines of communication are through

the White House, as they were in the Biden administration, where leader-level diplomacy and the channel between the U.S. national security adviser and China’s foreign affairs commission

director were critical not just to managing competition but also to communicating redlines. The Trump administration may be well served by relaunching the National Security

Administration–level channel developed by the Biden administration. But leader-level diplomacy, given Trump’s well-reported tendency to improvise and seek deals, may make sustaining a truly

competitive approach more difficult. Apart from the question of bilateral diplomacy and tariffs, the Trump administration will deal with a more assertive Chinese foreign policy. The Taiwan

Strait, after a period of brief de-escalation, is increasingly tense because of Beijing’s distrust of Taiwan’s new leadership and its steadily more significant military exercises around

Taiwan. China’s continual harassment of Philippine vessels, including incidents in the Second Thomas Shoal that have injured several Philippine sailors and risked triggering U.S. defense

commitments, have put the South China Sea on the verge of crisis. China is also supporting Russia’s war in Ukraine in more brazen ways, providing Russia with materials for its defense

industrial base and, according to European intelligence services, lethal assistance. For the incoming national security team, addressing Chinese provocations in the Indo-Pacific while

managing conflicts in the Middle East and Europe will prove challenging. The administration should resist the gravitational pull of those conflicts and prioritize revitalizing the sources of

American strength. National security is not just about foreign policy. Trump’s team should remember that the key to this decisive decade is not just what the United States does abroad. What

it does at home to improve its competitive position may be even more important.