The Trump administration approached its summit with Chinese leader Xi Jinping in October 2025 projecting confidence, asserting that it held leverage over China as the trade deficit country in the bilateral relationship. As U.S. Treasury Secretary Scott Bessent put it, “What do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us, so that is a losing hand for them.” This was quickly shown to be folly. As I argued in Foreign Affairs, trade wars are easy to lose when countries depend upon an exporter for hard-to-replace inputs, yet still conceive of trade as a zero-sum game. China has escalation dominance over the United States, meaning that at any level of threat, the Chinese government has the ability to inflict more pain on the United States than vice versa. To ease Beijing’s restrictions on rare-earth elements, for example, which allow China to control 80 to 90 percent of production, the United States has conceded on tariffs, technology controls, and visa policies during various negotiations.

But Washington’s inability to immediately decouple, let alone extract concessions, from China through tariff threats should not mean giving up on economic diplomacy. For centuries, lesser powers in the world economy subject to escalation dominance have navigated relations with their more powerful adversaries by bargaining while avoiding confrontation. In fact, until recently, that is how China—and essentially all other countries—have viewed their economic interactions with the United States, to the occasional frustration of U.S. officials.

Economic relationships are not all or nothing; they have room for resistance and cooperation, even if one side would clearly lose if it came down to outright conflict. Despite the high distrust and strategic rivalry between the two countries, the U.S.-Chinese economic relationship does not have to be played as a zero-sum game. The benefits from trade and diversification for both economies remain substantial, and China’s escalation dominance would not spare its own economy pain if it were forced into a tit-for-tat conflict with Washington. Indeed, Beijing, comfortable with the status quo, has little interest in such escalation.

At the upcoming summit between Xi and President Donald Trump, the U.S. government should initiate a different approach to the economic relationship by pursuing increased imports of key strategic goods as well as increased foreign direct investment from China. This should be only one part of a broader economic strategy, of course. Cooperation with allies will be necessary to encourage any sustained changes in Chinese commercial behavior and to diversify sources of supply over the longer term. A more complex assessment of Xi’s strategic goals and China’s vulnerabilities will also be needed for longer-term strategic success. But this meeting—and any that follow—give Washington a valuable opportunity to buy time to address the country’s acute needs.

START WITH STOCKPILING

Despite a decade of denouncing the threat of Chinese imports and investment, under both the Trump and the Biden administrations, the U.S. government has failed to meaningfully decouple even the most sensitive industries from China. As the economists Mary Lovely and Christine Wan have shown, declining direct U.S. imports from China have simply resulted in supply chains becoming more attenuated and less transparent. China remains the source of rare earths, specialized magnets, and the lower-end semiconductors used in autos and appliances, even if intermediate steps of production now take place elsewhere. In the critical area of pharmaceuticals, for example, the United States may import numerous generic drugs from India, but India relies on China for the feedstocks and components to produce them.

This situation is precisely why industrial decoupling is such an uphill battle: strong economic fundamentals drove these commercial arrangements and unwinding them is slow and costly. For now, Washington’s most important priority should be to build up short-term inventories of those strategic goods ultimately sourced from China. In an ideal world, the United States would immediately get them from elsewhere, but the Trump administration, like the Biden administration before........

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