How China is shackling Trump's cyber agenda

The big picture: China is America's biggest cyber adversary, but it's also the country that wields the most economic leverage over the U.S.

• For the Trump administration, keeping its promise to strike back against nation-state cyber spies, including China's, is a lower priority than managing trade ties with Beijing.

Driving the news: The Trump administration has paused plans to sanction China over last year's Salt Typhoon intrusions, according to a Financial Times report last week.

• Officials worry sanctioning China over Salt Typhoon would hurt the trade deal framework the U.S. and China struck in October.
• Thus, the administration has still yet to mount any public response to one of the most sweeping cyber espionage campaigns ever to hit the U.S.
• A Treasury spokesperson declined to comment on the sanctions pause. A U.S. official said the administration is "committed to ushering mutually beneficial trade relations with China without compromising on our national and economic security."

What they're saying: "We've made ourselves into a big target," Matt Pearl, director of the strategic technologies program at the Center for Strategic and International Studies, told Axios.

• "It would be unfortunate if this was more than a short-term, tactical decision."

Between the lines: This isn't the first time the Trump administration has sidestepped national security concerns for economic considerations.

• Trump said Monday that he was lifting a blockade on exports of Nvidia's H200 chips to China, in exchange for a 25% cut from future sales for the U.S. government.
• Meanwhile, the TikTok ban — which passed with huge bipartisan majorities due to fears of cyber-enabled Chinese disinformation and data sharing — is still in limbo. The ban started as Trump's idea in 2020, before he changed his tune and declined to enforce it.
• The U.S. official noted that there are still export controls on top-of-the-line Blackwell AI chips, and that China had agreed "crack down on fentanyl precursors, purchase U.S. agricultural products, and keep rare earths flowing," under the trade truce.

Zoom out: Trump's China problem comes as his administration reworks the federal government's role in cybersecurity policy and struggles to get top leaders in place.

• A forthcoming cyber strategy, expected as soon as next month, is reportedly just five pages.

• Congress failed this year to approve Trump's pick to lead the Cybersecurity and Infrastructure Security Agency — forcing the administration to resubmit a nominee for consideration in 2026.
• The Federal Communications Commission voted last month to roll back Salt Typhoon-inspired cyber rules for telecommunications providers.
• CISA is now ramping up for a hiring spree after losing more than a third of its headcount this year to buyouts and layoffs.

Reality check: China has been behind a range of cyberattacks on government agencies in the last year — and the Trump administration hasn't publicly responded to any of them.

• Anthropic uncovered evidence of China using its AI model to orchestrate 80%-90% of a cyber espionage campaign.
• The Salt Typhoon hackers reportedly broke into the phones of Trump and Vice President Vance.
• The U.S. has also said China breached the Treasury Department last December.

Yes, but: Sanctions are just one tool the administration can use to target China, and it's been common in past administrations to tamp down anti-China rhetoric and actions during similar economic negotiations, Pearl said.

• Indictments of individual hackers, visa restrictions and offensive cyber strikes are all on the table, Pearl added.
• The annual defense policy bill includes millions for the U.S. Cyber Command to increase its own cyberspace operations.

Go deeper: Beijing's hackers are playing the long game