Tensions between the United States and China are rising yet again. This time, the boogeyman is semiconductors—and specifically Huawei’s AI chips. The renewed conflict couldn’t come at a worse time, just weeks after both countries made significant steps toward de-escalating their two-year-old trade war.
That has changed at least for now with recent affirmative guidance from the Trump administration. They asserted that adhering to any form of “guidelines or guidelines anywhere in the world” would be against U.S. export regulations. Naturally, China is vehemently against this directive. They claim that it was a serious blow to recent, hard-won trade negotiations to calm growing tensions between the two economic superpowers.
On Wednesday, China’s Commerce Ministry in Beijing went all out. In response, they threatened all legal recourse against anybody that enforces the current U.S. export restrictions against Huawei’s AI chips. This announcement signals China’s resolve to defend its technology industry against increasing U.S. pressure.
This conflict can be traced back to the Trans-Pacific Partnership (TPP) and other trade negotiations. These negotiations had been largely successful in lowering tariffs and other trade impediments between the United States and China. Only a few weeks ago, it looked like both countries were headed in the direction of a much friendlier bilateral relationship. Third, China took real, consequential steps to address the underlying trade differences between our countries.
When the Trump administration issued guidance placing restriction on the Chinese tech firm Huawei, fears of a long-term conflict returned. Analysts are quick to caution that such export restrictions could jeopardize the fragile conversation. It’s a conversation that has developed over the recent round of trade negotiations.
The current battle over semiconductors is the poster child for what’s wrong with the growing intersection of technology and national security. As both countries vie for dominance in high-tech sectors, they face increasing pressure to navigate a complex web of regulations and geopolitical considerations.
Tempers are flaring over oil and gas leases again. Hard to say how this plays out and what impact it will have on future bipartisan negotiations. The stakes for both countries’ economies couldn’t be higher, as the possibility for a resuscitated trade war still hangs in the balance.
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