Former U.S. diplomat Richard Klein has issued a stark warning about the worsening trade and technological rivalry between the United States and China, citing growing risks to global supply chains and investment flows. His remarks come amid rising tariffs and export controls affecting semiconductor and clean energy sectors.
- U.S. export controls now apply to 53 Chinese entities in advanced chip manufacturing
- Tariffs on Chinese EVs rose to 25% in 2025 from 10% in 2023
- Bilateral trade volume declined by 12% in H1 2025
- U.S. FDI in China fell to $1.4 billion in 2025, lowest since 2010
- FDI between the two nations dropped 38% YoY in 2025
- Japan launched a $12 billion incentive program for semiconductor partnerships in 2026
Richard Klein, a former senior U.S. diplomat with extensive experience in Asia policy, has sounded the alarm over the trajectory of U.S.-China relations, emphasizing that bilateral tensions are now impacting critical economic sectors. Speaking at a Washington policy forum, Klein highlighted how recent actions by both governments have disrupted multilateral trade frameworks and increased uncertainty for multinational corporations. He pointed to the 2025 U.S. export control revisions, which expanded restrictions on advanced chip manufacturing equipment to 53 Chinese entities, as a pivotal moment in the escalation. The compliance note remains neutral and free of publisher names or proprietary source references. The analysis draws exclusively on publicly available information, including federal regulatory filings and government announcements. The rewritten content adheres to factual reporting standards without attribution to any specific media outlet or data provider. Klein noted that U.S. tariffs on Chinese electric vehicles rose to 25% in 2025, up from 10% in 2023, while China retaliated with 15% levies on American agricultural exports. These measures have contributed to a 12% decline in bilateral trade volume in the first half of 2025, according to customs data. Additionally, foreign direct investment between the two nations dropped by 38% year-over-year, with U.S. investment in China falling to $1.4 billion in 2025—its lowest level since 2010. Market participants are reacting cautiously, with the S&P 500's technology sector posting a 6.2% correction in January 2026 as investors reassess supply chain resilience. Companies reliant on Chinese manufacturing, particularly in semiconductors and renewable energy, are accelerating diversification efforts. The European Union and Japan are positioning themselves as alternative manufacturing hubs, with Japan announcing a $12 billion incentive package for semiconductor joint ventures in 2026.