POLITICO Tech: "Why the latest U.S.-China tech fight may be the biggest yet"
October 16, 2025
Host: Stephen Overly
Guest: Liza Tobin, Managing Director at Garno Global; former CIA analyst and National Security Council China Director

Episode Overview

This episode explores the rapidly escalating technology and trade conflict between the United States and China, focusing on Beijing’s new restrictions on rare earth exports and the U.S.'s tightening of chip-related export controls. Former U.S. government China expert Liza Tobin joins host Stephen Overly to analyze why this standoff is uniquely dangerous, how both nations are leveraging their respective strengths, and why the coming weeks will be pivotal for global tech supply chains, geopolitics, and the future of U.S.-China relations.

Key Discussion Points & Insights

1. The Precarious State of U.S.-China Relations

[02:34–04:48]

• Liza Tobin calls the present "a knife's edge" moment, citing unprecedented uncertainty and a wide range of possible outcomes:
  • At one extreme, she warns of “tacit U.S. capitulation” where the U.S. might acknowledge Chinese dominance in tech and supply chains.
  • At the other, a renewed and radical decoupling reminiscent of the sharp break during COVID-19 under former President Trump.
  • Tobin foresees "an ebb and flow where it may be some escalation and some de-escalation and really keeping things on that knife's edge." [04:29, Tobin]

2. China’s Rare Earth Export Controls and Their Impact

[04:48–08:22]

• China’s newly announced export restrictions cover not only raw minerals but also any products containing rare earths, with extraterritorial reach.
  • Even products with "0.01% of these [minerals]" would need a Chinese export license ([05:31, Tobin]).
  • While framed as tit-for-tat retaliation for U.S. exports controls, Tobin stresses this is a strategic, long-term plan by China to deter U.S. and global technology restrictions and assert technological superiority.
    • "This is part of an ongoing effort...to develop an export control system that both mirrors and responds to the U.S. and also tries to deter the U.S. and deter countries around the world from aligning with the United States." [07:17, Tobin]
  • The move is intended to pressure the U.S. to drop restrictions and to demonstrate China's dominance in critical supply chains.

3. Beijing’s Broader Objectives in the Tech Confrontation

[08:22–10:42]

• Tobin likens the Chinese approach to the "If You Give a Mouse a Cookie" story:
  • Every U.S. concession (e.g., allowing Nvidia to sell certain chips) emboldens China to demand more, aiming for "the whole laundry list"—removal of all U.S. trade barriers, investment controls, and export restrictions.
  • "Each time the Trump administration makes these concessions, it encourages the Chinese system to push for more." [09:32, Tobin]
  • The question now is whether the U.S. will "slam the door shut" or continue to negotiate under pressure.

4. The Trump Administration’s Strategy and International Alignments

[11:13–14:07]

• The next few weeks will test if the U.S. (under President Trump) can build an allied front with countries that have their own leverage points (Japan, Korea, Netherlands, Australia).
  • "Is the United States able to get other countries aligned with it to resist these extraterritorial, extrajudicial global regulations?" [11:38, Tobin]
  • China’s strategy is to coerce both the U.S. and its allies into complying with Chinese law, betting it can fracture the Western alliance on tech controls.

5. The U.S.-China Leverage Battle: Rare Earths vs. AI Chips

[14:07–16:51]

• Rare Earths: China’s dominance is a major pressure point, already influencing the Trump administration’s stance on trade.
  • Rare earths are "so fundamental to the building of modern technology...the whole world really depends on them." [13:42, Overly]
• AI Chips: The U.S. retains significant leverage in advanced compute technology (e.g., Nvidia, AMD chips), a domain where China lags far behind.
  • "That gap—U.S. leadership—will be able to lengthen because it will grow over time...they're not anywhere close." [15:03, Tobin]
  • Export controls are designed to widen this gap, making Chinese efforts to catch up more difficult.

6. Nature of Each Side’s Challenge

[16:27–18:12]

• China’s chip challenge: An “extraordinarily difficult” technological obstacle—replicating next-gen chips and chipmaking equipment.
• U.S. rare earths challenge: Far less a technical challenge, more a matter of “political will, focus, and strategy.”
  • “It’s not really that expensive of a problem… It's a matter of political focus and will.” [17:24, Tobin]
  • Solution would require sustained effort, likely across multiple administrations, and close cooperation with rare-earth-rich allies (Australia, Japan).

7. The Coming Weeks—Potential Trump-Xi Meeting

[18:12–20:46]

• An expected face-to-face between President Trump and President Xi could calm markets but is uncertain.
  • Tobin notes China often delays confirmation of such meetings as a negotiation tactic: "They’re trying to trade fake concessions... for real concessions on the American side." [19:21, Tobin]
  • Merely agreeing to meet is sometimes mistakenly seen as a victory by U.S. negotiators. The real prize for Beijing is substantive U.S. policy rollback.
  • China’s KPI: moving ever closer to technological and geopolitical parity or superiority.

Notable Quotes & Memorable Moments

• "We are on a knife's edge in U.S.-China relations right now. I think I see the widest spectrum of possibilities... that I've seen really over the last couple decades."

  • —Liza Tobin [02:52]

• "The breadth and the intricacy and the detail of the MOFCOM regulations... indicates that this isn't something they cooked up in a few days in response to what the U.S. Commerce Department did. This is part of an ongoing effort over several years..."

  • —Liza Tobin [07:08]

• "Each time the Trump administration makes these concessions, it encourages the Chinese system to push for more."

  • —Liza Tobin [09:32]

• "Is the United States able to get other countries aligned with it to resist these extraterritorial, extrajudicial global regulations?"

  • —Liza Tobin [11:38]

• "Rare earths is clearly an important chokehold and it worked once... to get the Trump administration to soften its posture on China trade."

  • —Liza Tobin [14:17]

• "Their ideal end state is to be at the top of the technology supply chain and control the entire AI stack... They're not close to that, at least on the hardware side."

  • —Liza Tobin [15:58]

• "Rare earth magnets are much less technologically complex. This is a matter of political will and focus and choice and strategy... The nation just hasn't gotten its act together."

  • —Liza Tobin [17:04]

• "A fake concession is just like, ‘Hey, we'll agree to meet.’ They're dressing this up as if it's a gift... It's not."

  • —Liza Tobin [19:21]

Timeline & Timestamps of Key Segments

• 02:32 – Liza Tobin assesses current U.S.-China standoff: spectrum from capitulation to decoupling
• 04:48 – Details on China’s rare earth export controls
• 08:22 – Analysis of Beijing’s broader strategy and demands
• 11:13 – Trump administration’s next moves and global alliances
• 14:07 – The leverage battle: rare earths vs. AI chips
• 16:27 – The differing natures of each side’s challenge
• 18:12 – The potential Trump-Xi summit and its strategic meaning

Takeaways

• The latest U.S.-China tech clash has global stakes and is more consequential than previous disputes due to its scale and the centrality of rare earths and advanced chips.
• The outcome depends on the ability of the U.S. to sustain a coalition of tech-leading allies and to muster political will to address its own vulnerabilities.
• Both sides possess significant, but very different, choke points—technological (U.S.) and raw materials (China)—making the confrontation a protracted and high-stakes standoff.
• The coming weeks, including a possible leadership summit, will likely decide the trajectory of tech trade—and possibly broader geopolitical—relations for years to come.