Summary

Brian McCarthy discussed a shift in U.S. policy toward China, highlighting the surprising decision to exempt TSMC from semiconductor tariffs, which runs counter to the administration’s earlier push for strategic decoupling aimed at securing supply chains, limiting investment flows, and restricting military-relevant technology transfers. Momentum built earlier in the year through allied cooperation with the EU, UK, Japan, and India on measures such as rules of origin and metals trade alliances has recently stalled, possibly due to Chinese back-channel threats, concerns about losing decoupling as a deterrent to a Taiwan conflict, or domestic political priorities. China’s tone has shifted from defensive to confident, suggesting it anticipated U.S. concessions through corporate or diplomatic channels. This change signals a weakening of U.S. “China hawks” and may embolden Beijing, potentially slowing or reversing progress toward a unified allied de-risking strategy.

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