Cozen Currents: It’s All (Including Iran) About China

“US-China competition has risen to such a level of prominence in Washington that just about any policy issue, no matter how seemingly tangential and domestic-focused, has a China angle.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

• As President Trump prepares to meet with Chinese President Xi Jinping at the end of the month, the desire to outcompete Beijing is shaping a broad array of policy decisions in Washington (and perhaps even creating a timeline for cessation of hostilities in the Middle East).
• The US and China are presenting diametrically opposed visions of the future of energy, with the former all-in on oil and gas and the latter doubling down on renewables.
• AI is a major front in the US-China tech war as the Trump administration seeks to expand use of the US AI tech stack abroad.

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China is Everything Everywhere All at Once

Trump Heads to China. Prior to the current Middle East conflict, President Trump had been expected to travel to China at the end of this month to meet with Chinese President Xi Jinping, in what could be the first in a series of in-person meetings between the two leaders this year. China – and specifically trade with China – is the administration’s top policy priority and central to the America First agenda. The timing of this planned meeting with President Xi could itself dictate President Trump’s timing regarding the cessation of hostilities in the Middle East.

• While the US-China relationship got off to a rocky start at the beginning of Trump’s second term, it has been trending toward greater stability since, with last October’s meeting between Trump and Xi establishing a relative period of calm. Although the deal announced at that summit did not address structural issues in the relationship, it extended the trade truce and led to other transactional breakthroughs, such as China’s resumed purchases of American soybeans.
• Since the meeting last fall, the two countries have been careful to avoid actions that could risk upsetting the other and knocking the tenuous truce off balance. For the Trump administration, this has included holding up weapons sales to Taiwan and rolling back export control restrictions on advanced AI chips.

Let’s Make a Deal. Trump’s visit to China will undoubtedly include plenty of fanfare, but observers are closely watching for the deal the two leaders could announce.

• Trump and Xi are likely to announce some sort of deal during their summit in China, but the primary focus will be on the optics of the visit. Trump has spoken highly of his visit to China during his first term, and it is likely that similarly grandiose reception plans are in the works.
• The top focus of the pending deal will likely be an extension of the current trade truce. This would entail the US holding off on new export controls on advanced technology in return for China continuing to export critical minerals, potentially through the end of Trump’s term. Neither country’s leadership is particularly interested in conflict, though there is a tacit acknowledgement of the competition in the relationship that will continue.
• In addition to this extension, the agreement will likely include several transactional components, such as Chinese purchases of US agricultural products, aircraft, and energy exports in return for a further reduction in US tariffs and advanced AI semiconductor export controls. One other area to watch is whether Trump welcomes any Chinese investment into the US, an area that has seen bipartisan pushback in recent years.

Looking For an Edge. The US-China relationship is the most important international relationship, but the drive to compete with Beijing is influencing policy decisions across a wide variety of issues in Washington.

• While the US-China relationship has been the US’s top foreign policy focus for at least the last decade – and one of the only issues that unites an otherwise sharply divided Washington – the competitive aspects of it have started to permeate into nearly all facets of US policy. Although China may not always be mentioned when discussing a specific issue, it is often a motivating factor in any given policy decision, both domestically and abroad.
• The bipartisan appeal and ubiquity of the drive to compete with China have also opened a new lane for companies to make their pitch to lawmakers. While this is not a golden ticket, framing an issue as important in the US-China competition can sometimes elevate its profile in Congress and broaden a campaign’s interested audience. As I noted last summer on my Beltway & Beyond: In-Conversation podcast with Wall Street Journal reporter Gregory Zuckerman, “Decoupling from China is happening. Both parties have treated this as a long-term economic priority, and distance without isolation is the goal.”

Energy is the Source of Power in US-China Rivalry

The US Strategy. America is doubling down on natural gas and oil. That’s evident not only in domestic policy such as permitting but also in recent US actions in Venezuela and Iran. Energy is always a dimension of US policy in the Middle East, notwithstanding the more immediate focus on nuclear deterrence.

• From the White House point of view, President Trump came back into office at a time of crisis for American energy — one regulation after another meant to misguidedly hurry the fossil fuel industry into early retirement. Furthermore, the planned replacement for oil and gas with renewables in the administration’s view exacerbated a national security threat, leaving the country dangerously dependent on Chinese supply chains. In most cases, it’s not fossil fuels first, it’s fossil fuels only — (except for nuclear power).
• Many of these fossil fuel regulations have since been lifted. There are far too many to count but some of the important ones have resulted in mass approvals of oil and gas leases and permits for the associated projects, opening up more of the country for such purposes, lowering the costs companies pay for the privilege, and ending greenhouse gas emissions limits for the nation’s power plants and drills.
• The administration’s bid to end reliance on China extends to the latter’s dominance over the critical mineral supply chain. Critical minerals are one of the administration’s premier geoeconomic initiatives. The administration has pursued seven equity deals with mineral firms (one also included a price floor agreement), two of which have been signed so far in 2026: $1.6 billion into USA Rare Earth and $150 million into ATALCO. It’s been a whole-of-government effort. The Department of Energy was reorganized to include a prime focus on critical minerals; funding for various projects has come from the Commerce, Defense, and Labor Departments, the Development Finance Corporation, and the Export-Import Bank, which recently approved a $10 billion loan to establish Project Vault: a critical minerals strategic stockpile.
• Minerals have also been a major component of the White House’s foreign policy. While President Trump has significantly emphasized bilateral relations with other individual countries in international affairs as opposed to multilateral outreach through large organizations, critical minerals is the one area where the White House is pursuing multilateralism. In December, they unveiled the Pax Silica — a collective pledge to establish mutual, reliable supply chains — to which ten other countries have signed. Last month, they held the Critical Minerals Ministerial, simultaneously unveiling multiple bilateral agreements as well as launching the Forum on Resource Geostrategic Engagement.

China’s Counter. In stark contrast, China has instead chosen to dominate the future of green energy. Some fear that the US is backing the wrong horse.

• China produces and installs more solar and wind energy capacity than the rest of the world combined, and renewable energy generation makes up more than half of its total energy output. By 2023, a solar module produced in China was 65 percent cheaper than one made in the US. China produces and buys around 70 percent of the world’s EVs, and EVs make up more than half of the domestic vehicle market. Ditto for the vast majority of battery cells, cathodes, anodes, and wind-turbine nacelles. Not only does this provide China a potential off-ramp from its current heavy reliance on vulnerable petroleum imports, but it also is a pathway to control the value chain for the energy technology of the future.
• The Biden administration’s response to China’s stranglehold on renewable supply chains, as with many other Western industrialized democracies, was to incentivize domestic industry and manufacturing along these lines.
• Likewise, to support a renewable power capability, the Biden administration imposed a two-year moratorium on solar tariffs impacting Southeast Asian countries. The current White House, on the other hand, imposed major tariffs (specifically solar) on these countries, effectively closing that source of supply.

Trying to Stack the Deck Against China

US-China AI Competition. AI has featured prominently in the US-China tech war.

• Last year’s release of a new AI model from Chinese company DeepSeek with seemingly similar performance as top US models was compared to a “Sputnik moment.” The AI race has not abated since then.
• Last week, Anthropic accused three Chinese start-ups of using fraudulent accounts to train their chatbots on data from Anthropic’s Claude chatbot. This process (known as distillation) allows for training AI with less computing resources. Last year, OpenAI made a similar accusation towards DeepSeek. Reuters reported last week that DeepSeek exclusively granted access to its latest model to domestic semiconductor companies, including Huawei.

Sharing the Stack. The Trump administration seeks to promote use of the US AI tech stack abroad.

• AI and Crypto Czar David Sacks has argued that the United States needs to maximize market share in AI and that winning the AI race would depend on the rest of the world relying upon the US AI stack (chips, models, and applications). In his perspective, too-tight export controls would open opportunities for China to dominate the market and become entrenched in AI globally.
• “If we are overly restrictive in terms of US sales to the world, I think that there will be a time where we kick ourselves and say, ‘All of a sudden Huawei is everywhere when we used to have the market to ourselves. Why didn’t we take advantage of that and lock it in?’” Sacks told Bloomberg last year.
• The Trump administration rescinded former President Biden’s AI Diffusion Rule and is instead pushing for wider adoption of the US AI stack as a means to counter Beijing. Last year, Trump signed an executive order creating a Department of Commerce program to promote export of the US AI tech stack. Last month, the White House announced new steps to implement Trump’s vision for global uptake of the US stack. This effort includes National Champions Initiative to incorporate other countries’ AI companies into the stack, a US Tech Corps within the Peace Corps to facilitate AI adoption, and international financing for AI.
• In December, President Trump allowed the sale of Nvidia’s H200 chips to China, though China reportedly plans to limit access to them as it seeks self-sufficiency in chips.

Opposition in Congress. Some lawmakers, including certain congressional Republicans, are pushing back on the administration’s approach to AI export controls.

• Last year, the Senate added the GAIN AI Act, which would prioritize US customers for chips ahead of overseas sales, to its version of the National Defense Authorization Act. In the face of opposition from the White House, the provision failed to make it into the final version of the bill.
• Last week, the House Foreign Affairs Committee approved a bill to give Congress a 30-day review period for advanced chip sales to US adversaries and the ability to block such sales, similar to procedures for weapons sales.
• Trump’s veto power and his sway over congressional Republicans creates obstacles to passing legislation to restrict AI exports, but it’s a sign that Sacks’ outlook is not the unanimous view within the GOP.

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