Former Trade Policy Chief Plans Trump’s New China Strategy: ‘Decoupling’

What’s happening: In his new book No Trade Is Free, Robert Lighthizer, the former U.S. trade representative under the Trump administration, warns the U.S. must disentangle itself from China’s expansive economy, calling for a “strategic decoupling” between American and Chinese markets. His comments come amid booming trade between the two nations, which reached an all-time high in 2022. He advocates for more tariffs, increasing scrutiny on Chinese investments in the U.S., and a ban on Chinese social media companies.

• What is decoupling? Decoupling is the unwinding of close economic ties. In practice, it would mean shifting American supply chains out of China and a decreased U.S. dependency on Chinese-manufactured goods. Instead of simply "de-risking,” a strategy advocated by the Biden administration and certain manufacturers, Lighthizer says this sweeping approach is necessary to combat national security threats and Chinese control over American companies.

The state of play: Despite steps taken by both former President Donald Trump and President Joe Biden to reduce U.S. reliance on Chinese goods, imports from China are still incredibly high, and China remains America’s third largest trading partner, despite Chinese imports being at a 20-year low. China continues to be a top exporter of important goods, from solar panels and steel to electronics and plastics. While decoupling and raising tariffs would increase prices for American consumers, Lighthizer argues that these steps are necessary to rebuild the domestic economy and cut back Chinese control in the country.

Why does it matter? Take the COVID-19 pandemic. After decades of shipping jobs to China, policymakers realized that what was left of U.S. factories did not have the capability to produce critical supplies—from pharmaceuticals to electronic chips for hospitals. This was quickly identified as a major risk to American national security. Plus, China uses its economic might to coerce American companies to play by its rules, from what content can be included in Hollywood movies to how American businesses can conduct themselves.

Next steps: Once a taboo in policy circles, talk of “decoupling” is becoming more frequent as Washington encourages Western companies to invest in “trusted trading partners” like India to lessen U.S. reliance on China. Even as some administration officials worry that an official break from China could harm both economies, it is notable that Biden kept Trump’s tariffs in effect—and went further on key technology sectors.