When the dust settles on a year that included a ceasefire in the brutal war in Gaza, persistent but ultimately fruitless efforts to end the war in Ukraine, and the ramp up to a potential war in Venezuela, the biggest US national security story of 2025 may turn out to be one in which not a single shot was fired: This was the year that the US tried to declare economic war on China, and China fought back.

Early this year, in its final weeks in office, the Biden administration released its most sweeping rules yet governing the international trade of the semiconductor chips used to develop artificial intelligence models. Though these rules governed chip access for every country on earth, their primary aim was keeping the highest-end chips out of China.

This was in keeping with the concern of many US officials in both parties that the US risks falling behind China in the race to develop advanced AI, and that this race would be key to the balance of power in the 21st century.

The importance of US-China competition was an area of agreement between the first Trump and Biden administrations and there was every reason to believe the aggressive posture would carry over when President Donald Trump retook the Oval Office. Indeed, in its first month in office, the Trump administration slapped a 10 percent tariff on China for its alleged failure to combat the trade in fentanyl — those tariffs were later doubled. By April, the tariff rate was up to 145 percent, with Trump citing a “national emergency” caused by unfair Chinese trading practices. Treasury Secretary Scott Bessent has described these tariffs as effectively an “embargo.”

At the end of the 2025, things are in a very different place. The US dropped its steepest tariffs after just a few weeks, despite no major concessions from the Chinese side, and were dropped down to 20 percent after Trump held what he called a “12 out of 10” meeting with Chinese leader Xi Jinping in late October. In December, Trump scrapped much of the effort to restrict China’s access to chips by approving sales of Nvidia’s advanced H200 chips in the country, despite the objections of GOP hawks on Capitol Hill. “President Xi responded very positively!” announced the president once thought of by many as a dangerously aggressive China hawk.

The events of this year could end up being viewed as the moment of a fundamental shift in the power balance between the two countries, and one that could have ramifications in conflicts to come.

“It’s been a landmark year in the US-China relationship,” said Eddie Fishman, a former State........

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