Counterintuitively, U.S. and global auto firms need to collaborate with Chinese suppliers to reduce strategic dependency. The model involves onshoring Chinese hardware and manufacturing expertise while maintaining national control over sensitive AI software and networks, creating a strategic "co-opetition."

A "chips for rare earths" equilibrium underpins the U.S.-China relationship. Any concession by China on rare earth controls would likely require reciprocal U.S. flexibility on advanced semiconductor exports. This strategic deadlock disincentivizes escalation from either side on the technology front.

Counterintuitively, Thompson argues against cutting China off from Taiwan's semiconductor manufacturing (TSMC). A China dependent on Taiwan is less likely to act aggressively toward it. Creating a situation where the U.S. relies on Taiwan while China does not increases the risk of conflict, as China's optimal move could become disabling that key U.S. asset.

Instead of focusing on military losses like aircraft carriers, the most crucial deterrent to a U.S.-China conflict is the certainty of a generational global economic collapse. The devastating impact on both nations' economies and the world's is a far more compelling argument for peace.

In a world of aging, export-dependent economies like China and Korea, the U.S. is the only large, first-world nation that is a net consumer. This makes access to its market an incredibly powerful negotiating tactic, allowing the U.S. to leverage its consumer base as a tool of foreign policy.

The deep economic interdependence between the U.S. and China makes a full "decoupling" too costly for either side. Instead of a clean break or a lasting peace, the relationship will likely be defined by a continuous cycle of targeted disputes, negotiations, and temporary agreements.

Contrary to common perception, China holds the stronger hand in its relationship with the U.S. As the world's creditor and primary producer, China can sell its goods to billions of other global consumers. The U.S., as a debtor and consumer nation, is far more dependent on China than the other way around.

Unlike the bipolar, economically isolated US-Soviet dynamic, today's world is multipolar. Crucially, the US and China compete within the same global economic system, making containment strategies from the Cold War era ineffective and dangerous to apply.

The latest U.S. National Security Strategy drops confrontational rhetoric about China as an ideological threat, instead framing the relationship around economic rivalry and rebalancing. This shift prioritizes tangible deals over promoting American values globally, marking a departure from Reagan-era foreign policy.