The U.S.-Chinese relationship is at a critical juncture, with the U.S. facing a strategic deficit that has been festering for decades. The trade war of 2025, while brief, exposed the U.S.'s vulnerability to China's leverage in critical minerals and rare-earth elements. This vulnerability has been a long-standing issue, with China dominating the global supply chain for these resources, which are essential for various industries, including smartphones and fighter jets. The Trump administration's response was a temporary truce, which later led to negotiations and concessions from both sides. However, this situation highlights a fundamental gap in U.S. strategy: the absence of competitive leverage over China. The author argues that this strategic deficit is not a recent development but a result of U.S. policymakers' reluctance to exploit or deepen China's weaknesses, viewing such efforts as unnecessary or counterproductive. The U.S. has failed to address China's pain points and develop options for strategic pressure, despite China's aggressive actions, such as intellectual property theft, cyber-intrusions, and economic coercion. China's success in cornering the Trump administration was not just due to the U.S.'s failure to secure its supply chains but also a result of its own strategic capabilities and the U.S.'s inability to exploit China's anxieties. China's economy faces challenges, including weak domestic demand, mounting debt, and an aging workforce, while its military, the PLA, is corrupt and untested. The regime's reliance on repression and propaganda further exacerbates these issues. China's sovereignty disputes, its relationship with North Korea, and its heavy dependence on the U.S. for energy, capital, and technology also contribute to its vulnerabilities. The U.S. must now build competitive leverage to address these vulnerabilities and deter Chinese aggression. This involves leveraging China's own weaknesses, such as its reliance on exports and foreign markets, to impose costs and disrupt its industrial base. The U.S. should target China's export-driven growth model, coordinate with allies to protect their industries, and impose high-standard trade agreements. Additionally, the U.S. must build competitive leverage to support deterrence, particularly in the realm of currency and energy. The U.S. dollar's dominance in China's international economic activity provides a significant vulnerability, and the U.S. should prepare to impose unacceptable costs on China during a crisis. China's reliance on energy imports, particularly crude oil, offers another pressure point, and the U.S. should prepare to disrupt China's seaborne energy imports. The U.S. should also coordinate with allies to restrict China's access to critical defense-related sectors, such as aerospace, and expose China's malign activities, including its influence operations and information control. The author emphasizes the need for a comprehensive and coordinated approach, leveraging China's vulnerabilities while avoiding unnecessary escalation and civilian suffering. The U.S. must operate across multiple time frames and prepare for various scenarios, ensuring that its actions are carefully timed and sequenced. This strategy aims to protect and advance U.S. national interests, tilt the competition in the U.S.'s favor, and ultimately improve the prospects for restraint and stability in the U.S.-Chinese rivalry.
