The U.S.-China trade relationship, once seen as a driver of global prosperity, has become a dangerous paradox: American consumer demand and technological collaboration are now funding the growth of China’s military—a force built to challenge U.S. dominance. As Beijing uses trade profits to develop advanced weapons, control key global waterways, and support proxy conflicts, economic ties with China have turned into a serious threat to U.S. national security. I recently wrote a "tongue in Cheek" article about China's Military expansion, but now it's gotten SERIOUS. A complete economic decoupling isn’t just an option—it’s a necessity. Here’s why.
1. How Trade Fuels China’s Military Rise
China’s massive trade surplus with the U.S. and its allies—over $700 billion annually—provides the cash to strengthen its military in alarming ways.
The People’s Liberation Army (PLA) budget has grown 7.2% each year since 2020, funding weapons like the DF-21D “carrier-killer” missile, J-20 stealth fighters, and AI-powered drone swarms. In 2025, China continued this trend, with Premier Li Qiang announcing another 7.2% defense spending increase during the National People’s Congress in March, signaling a focus on military expansion amid trade tensions.
Export profits also help China build naval bases in Djibouti and Cambodia,
giving the PLA control over vital trade routes like the Strait of Malacca and the Red Sea. In Yemen, Chinese technology—like radar-jamming equipment supplied to Houthi rebels—has directly threatened U.S. naval operations. A March 2025 U.S. CENTCOM operation against the Houthis highlighted this threat, with discussions of a potential U.S.-backed ground operation in Yemen to counter Chinese-backed forces, though no final decision has been made. These developments show how trade indirectly fuels proxy conflicts against American interests.
2. The Hidden Dangers of Technology Ties
U.S. reliance on Chinese technology and resources is accelerating China’s military-civil fusion strategy, where civilian industries support military goals.
Semiconductors and Military Tech
Despite U.S. sanctions on advanced chips, Chinese firms still import $300 billion in Western equipment each year to build factories for older-generation chips.
These chips power missile guidance systems,
among other military uses, keeping China’s arsenal growing.
Critical Minerals
China controls 85% of the world’s rare earth minerals, essential for both U.S. electric vehicles and the PLA’s electromagnetic railguns. In 2025, China tightened its grip by imposing export controls on critical minerals like gallium and germanium, a retaliatory move against U.S. tariffs that threatens U.S. defense firms reliant on these materials for aircraft and semiconductors Joint AI research between U.S. tech giants and Chinese universities, like Tsinghua’s AI Institute, often benefits China’s military. These collaborations have inadvertently advanced autonomous weapons systems, putting U.S. security at risk.
3. Why “De-risking” Isn’t Enough
Half-measures like tariffs and export controls can’t address the deeper risks of economic ties with China.
The U.S.-China trade war, escalating since 2018, reached new heights in 2025. The Trump administration imposed a series of tariff hikes: a 10% increase on February 1, another 10% on March 4, and a further 34% on April 2, bringing the total tariff rate on Chinese goods to 54% by early April. China retaliated swiftly, raising tariffs on U.S. goods to 15% on March 10, then to 84% on April 9, and finally to 125% on April 11. By mid-April, U.S. tariffs on Chinese imports hit 145%, with China imposing 125% on U.S. goods, causing a projected 0.2% loss in global merchandise trade. Chinese firms bypass restrictions by rerouting goods through third countries—for instance, Malaysia’s semiconductor re-exports to China surged 54% in 2024, according to trade reports. Financial ties also remain deep: U.S. investors hold $1.3 trillion in Chinese stocks and bonds (per 2024 financial data),
indirectly funding defense giants like AVIC, which builds PLA aircraft.
On the diplomatic front, China uses access to its market as a weapon, halting Boeing deliveries and U.S. beef exports in 2025 while reducing soybean imports to a 17-year low. These systemic issues show that partial de-risking leaves the U.S. vulnerable.
4. The Human Cost of Inaction
Failing to decouple from China doesn’t just risk military disadvantage—it threatens human lives and global stability.
China’s growing military presence, fueled by trade profits, heightens the risk of conflict in flashpoints like the Taiwan Strait and South China Sea. In March 2025, China conducted military drills around Taiwan, with President Xi calling for troops to “strengthen their preparedness for war,” escalating tensions. A potential conflict over Taiwan could lead to catastrophic loss of life
estimates suggest a U.S.-China war could result in tens of thousands of casualties in the first weeks alone,
given the PLA’s 340-ship navy and advanced hypersonic missiles. Beyond direct conflict, China’s support for proxy groups like the Houthis in Yemen has already endangered U.S. service members, with radar-jamming tech contributing to attacks on American ships in the Red Sea. Economically, the trade war’s impact hits vulnerable populations hardest: U.S. tariffs have raised consumer prices, with three out of four Americans expecting further increases, while China’s retaliatory tariffs on U.S. agricultural goods threaten the livelihoods of American farmers. Inaction risks not only a strategic defeat but also immense human suffering on both sides of the Pacific.
5. A Roadmap for Decoupling
A gradual, focused decoupling plan can minimize economic disruption while restoring U.S. independence.
Phase 1 (2025-2027): Ban exports of technologies with military applications, like quantum computing and advanced optics. Impose 100% tariffs on industries tied to PLA suppliers, such as commercial drones. Bring back production of critical pharmaceutical ingredients to the U.S.—a priority Trump highlighted in April 2025, noting the U.S. can no longer produce enough antibiotics for wartime needs.
Phase 2 (2028-2030): End China’s Permanent Normal Trade Relations status, removing trade privileges. Require U.S. companies operating in China to undergo supply chain audits—detailed reviews to ensure no materials support the PLA. Build a “Coalition of Secure Trade” with allies like India, Mexico, and the EU to shift manufacturing away from China.
Phase 3 (Post-2030): Fully disconnect financially by imposing sanctions on banks linked to the Chinese Communist Party. Create a self-sufficient energy and manufacturing zone in the Americas under USMCA rules, reducing reliance on Chinese goods.
6. Lessons from History, A Path Forward
The Cold War offers a blueprint: Reagan’s technology embargo in the 1980s crippled Soviet military research by 1989. China’s economy today is ten times larger than the Soviet Union’s was at its peak, making the challenge tougher. But the U.S. has better tools now, like AI-driven supply chain mapping and strong allied manufacturing networks.
The cost of inaction is steep.
Every purchase of Chinese-made goods risks indirectly funding a rival military,
from advanced weapons to global bases, that could one day outmatch America’s own. Decoupling will be costly and complex, but the alternative—continuing to finance a strategic adversary while risking human lives and global stability—is far more dangerous.
