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The policy of strategic decoupling from China, initiated under the premise of national security and economic resilience, has become one of the most defining and contentious features of 21st century global commerce. Almost a decade after the first major tariffs were imposed, the results are becoming clear: the strategy is profoundly confusing American allies, penalizing American innovation, and inadvertently accelerating Beijing’s technological independence.
The rhetoric out of Washington suggests that these policies are necessary surgical strikes intended to “de-risk” critical supply chains. The reality, however, looks less like surgery and more like a series of erratic, self-inflicted wounds. The decision in November 2025 to ban the sale of Nvidia’s scaled-down B30A AI chips to China — a response to China’s own counter-ban on the previously compliant H20 chips — epitomizes the failure of this approach. It highlights a policy loop where restrictions lead to Chinese retaliation, which in turn leads to further, more restrictive American bans.
This is not a sustainable strategic framework. It is a tit-for-tat economic skirmish that demands American companies shoulder billions in losses while simultaneously bolstering the resolve of their primary competitor.
The financial cost to American industry is staggering. Nvidia, the key innovator in the artificial intelligence sector, is a prime example. The on-again, off-again chip restrictions imposed throughout 2025 have already cost the company billions in anticipated revenue. The firm faced a charge of approximately $4.5 billion earlier in the year linked to unsold inventory of chips designed specifically to comply with previous U.S. regulations. Forecasts predicted an additional revenue loss of up to $8 billion in the subsequent quarter.
These are not trivial numbers. This revenue, which American firms would typically reinvest in domestic research, development and high-wage jobs, is now simply vanishing from U.S. balance sheets. The immediate effect of protectionism, particularly in high-tech fields, is to reduce the scale and market access of American leaders, which in the long run hinders their ability to maintain their global technological edge against emerging rivals.
Furthermore, the policy of decoupling is causing significant friction with U.S. treaty allies. The strategy is only taking hold in industries where American firms can find alternative suppliers in countries that are both economically capable and geopolitically aligned with Washington. When potential suppliers are in non-aligned states, U.S. firms often prefer to absorb the political risk and remain in China, demonstrating that the rift is often political expediency rather than a supply chain necessity.
Countries like Taiwan, Japan and South Korea, integral to the global semiconductor supply chain, are incurring substantial financial losses as they are compelled to relocate manufacturing and abandon existing facilities in China due to U.S. export controls. The lack of a consistent, predictable U.S. policy — the back and forth over which chip is banned this month — creates immense uncertainty. This uncertainty undermines the grand strategy of forming a unified front against Beijing, pushing allies toward pursuing independent strategies that prioritize stability over loyalty to an erratic Washington. The lack of clarity around the U.S. position encourages other nations to diversify their alliances and pursue trade agreements that bypass American influence.
But the greatest paradox of the current protectionist approach is that it is funding and accelerating the very outcome it was designed to prevent: Chinese technological self-sufficiency. Each new ban on advanced U.S. components gives Beijing a clear, undeniable mandate to pour billions of dollars of state support into domestic champions like Huawei and their AI chip development arms.
When the U.S. cut off the most advanced Nvidia chips, China responded by prioritizing indigenous alternatives. When the U.S. then supplied a scaled-down, compliant chip (like the H20), China quickly banned its use in strategic data centers to avoid becoming reliant on what U.S. officials openly described as “addiction” to obsolete American technology.
The subsequent ban on the B30A in November 2025 merely hardens Beijing’s resolve. Washington is effectively outsourcing its competition policy to Beijing, allowing the Chinese Communist Party to set the terms of engagement and mobilize its vast state resources to fill the market gaps created by American withdrawal.
The architect of the original tariff strategy, former U.S. Trade Representative Robert Lighthizer, is correct in arguing that the post-war global trade system is broken. But attempting to fix it through a strategy of unilateral retreat and domestic market protection is proving costly, confused and ultimately self-defeating. Instead of slowing China’s rise in strategic technologies, the U.S. is simply ensuring that when China finally achieves independence in AI and chip manufacturing, it will be a competitor forged in the fire of necessity, owing nothing to American systems or standards.
It is time for the White House to recognize that the current decoupling strategy is failing its own objectives. The path forward must involve coordinated, targeted restrictions built on international consensus, not broad, inconsistent bans that only wound American businesses and hand a strategic advantage to Beijing.