A field guide to Washington’s last cards
Since the U.S.–China trade war began in 2018, the script is familiar:
1️⃣ Treasury/USTR leak a “tough new package.”
2️⃣ Markets wobble, pundits insist “this time is different.”
3️⃣ Six months later the deficit is still >$300B and your iPhone is still made in Shenzhen.
That cycle is breaking down, not because Washington lost the will, but because the easy industrial exits are gone. What remains are choke points we can’t swap out quickly (rare earths, APIs, precision bearings) and financial weapons that often hurt us too.
Here’s the ledger of what’s left and what it costs.
1. 📦 Tariffs: Scraping the ceiling
- Status: 66% of Chinese goods already face Section 301 duties (~19% average).
- What’s left? Legally >100%, but practically anything >50% just reroutes through Vietnam, Malaysia, Mexico.
- CBP problem: No capacity to police relabeling fraud at scale.
Verdict: Symbolic more than disruptive. The tariff well is dry.
2. ⚙️ Choke-Point Sanctions: The four imports that still matter
| Sector | U.S. Share from China | Timeline to Relocate | Blowback |
|---|---|---|---|
| 🧲 Rare earth oxides | 78% | 5–7 yrs | F-35s & wind turbines stall |
| 🔋 Battery graphite | 69% | 4–6 yrs | EV tax credits meaningless |
| 💊 Pharma ingredients | 52% | 3–5 yrs | Generic drug shortages in months |
| 💻 Mature-node chips | 44% | 2–4 yrs | Auto & appliance lines idled |
Catch: Every choke-point input is dual-use. Beijing counters with gallium, germanium and graphite bans. Either way the U.S. gets a security headache.
3. 💣 Financial Weapons: The nuclear menu
| Tool | What it does | Collateral damage |
|---|---|---|
| 💵 SWIFT expulsion | Cut Chinese banks from dollar clearing | Boosts CIPS and digital yuan adoption |
| 🌐 Secondary sanctions | Punish firms that relabel Chinese inputs | ASEAN hits U.S. ag and tech with barriers |
| 📉 Forced ADR delistings | Push Chinese firms off U.S. markets | Capital shifts to HK or Singapore. U.S. funds lose fees |
4. 💼 Investment Restrictions: The outbound screen
- Current: Treasury pilot covers AI, semis, quantum.
- Congress wants: all advanced manufacturing, with even tiny equity stakes banned.
- Reality: EU and Japan refuse to mirror rules. U.S. LPs route money via Cayman feeders.
Verdict: Capital finds the gap.
5. 🎓 University & Visa Bans: The talent choke point
- Idea: Restrict Chinese grad students in sensitive fields (AI, semis, biotech), revoke OPT work visas, or block joint research.
- Appeal: Quick symbolic win that polls well domestically.
- Blowback:
- U.S. STEM programs lose 30–40% of their grad student pipeline.
- Labs and startups face brain drain just as China doubles down on R&D at home.
- Universities quietly lobby against it. Allies will not copycat.
Verdict: Politically loud, strategically leaky. Hurts U.S. innovation more than China’s.
6. 🌍 Migration map: What’s gone vs. what’s stuck
Already gone (2018–23)
👟 Shoes → Vietnam
🪑 Furniture → Mexico, Indonesia
📺 Low-end electronics → India, Bangladesh
👕 Garments → Ethiopia, Central America
Still stuck
📱 iPhone final assembly (220k staff in Shenzhen)
🧲 Rare-earth separation (Baotou’s acid baths, not Texas)
🔋 EV lithium hydroxide (Jiangxi brine-to-battery)
⚙️ Precision bearings (80% of jet-engine capacity in Luoyang)
The uncomfortable truth
Washington’s leverage is now financial and human-capital, not industrial. Each escalation accelerates the split into non-dollar finance and non-U.S. tech standards. Meanwhile, the imports that matter: rare earths, APIs, graphite cannot be conjured up in Ohio on a political timeline.
The trade war is entering its “hurt-me-to-hurt-you” phase. Fewer tariffs on bar stools, more choke-point brinkmanship that lands on U.S. consumers, defense, green tech and even its own university labs. Unless allies join a real multilateral cordon, the unilateral playbook is almost out of pages.
