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Illustration: Lazaro Gamio/Axios

As the Chinese government accelerates its crackdown on Hong Kong's pro-democracy protesters, the Trump administration has sharpened its view of the world's most important bilateral relationship.

What's happening: Senior officials tell me they are increasingly concerned about Beijing's treatment of activists in Hong Kong and, increasingly, fear overreach that could also target Taiwan. This comes as any chance of an armistice in the trade war seems to be shrinking away.

Why it matters: Based on numerous conversations with Trump administration officials over the last few weeks, it is clear that many of the president's top advisers view China first and foremost as a national security threat rather than as an economic partner.

  • This is a new normal. And it's poised to affect huge parts of American life, from the cost of many consumer goods — likely to go up under a punishing new round of tariffs — to the nature of this country's relationship with the government of Taiwan.
  • Trump himself still views China primarily through an economic prism. But the angrier he gets with Beijing, the more receptive he is to his advisers' hawkish stances toward China that go well beyond trade.
  • The big open question remains whether Trump's anger with China — especially its flooding of the U.S. with deadly fentanyl and its backtracking on promises to make huge agricultural purchases — will ever grow to such a point that he wants to move in a tougher direction on national security and human rights. If he gets to that point, his advisers will have plenty of hawkish policy ideas waiting for his green light.

Behind the scenes: A New York Times op-ed by Hong Kong activists Joshua Wong and Alex Chow — titled "The People of Hong Kong Will Not Be Cowed by China" — has been circulating inside the administration. And U.S. officials have been reviewing reports of Chinese authorities snatching protesters off the streets.

  • Senior administration officials have also contemplated selling another tranche of advanced weaponry to Taiwan, beyond the recent F-16 fighter jet sale, according to 3 sources briefed on the sensitive internal conversations. A senior administration official cautioned that these talks may go nowhere and that Trump would probably hesitate to expand his fight with China to include Taiwan.
  • Trump administration officials have also discussed terminating the State Department's self-imposed restrictions on contact with Taiwanese officials. A policy under discussion would let Taiwanese officials attend meetings at State Department headquarters and send direct letters to State.
  • A State Department official responded to this reporting: "The Department of State regularly reviews our activities with Taiwan, within the scope of our unofficial relationship. As of this time, no decisions to change current practices have been made."
  • If the State Department made such a change, it would stick in China's craw and lessen the chances of a trade deal. But it wouldn't be the first departure from the status quo under this administration. Trump enraged Beijing and broke decades of protocol a few weeks after he was elected by taking a phone call from Taiwan's leader.

The big picture: As the Hong Kong situation deteriorates, the Trump administration is entering the tensest stage of its economic standoff with China. The situation is further complicated by China's militarization of the South China Sea and dominant role in propping up North Korea's rogue regime.

  • Trump's latest round of China tariffs kick in today, imposing a new 15% tariff on billions worth of consumer products.

Between the lines: Trump's advisers say he was genuinely infuriated that, in his view, the Chinese recently reneged on 2 key promises: to buy huge amounts of agricultural goods from American farmers and to stop the flow of deadly fentanyl into the U.S. So any progress toward getting the talks back on track would likely have to start with the Chinese making a new offer on agriculture purchases and cracking down on drug trafficking.

  • About a week and a half ago, Chinese and U.S. officials at USTR and Treasury had a phone call about agricultural purchases, per a U.S. administration official. Another source briefed on these lower level discussions said the Chinese are frustrated that Trump is not giving them enough credit for the agricultural goods they bought earlier this year.
  • Sources briefed on the talks say the the two sides still aren't wrestling with the thorniest trade issues that caused the impasse in the first place. The most optimistic scenario for those favoring a deal is that the two sides can generate enough goodwill in the next couple of weeks that a Chinese delegation, led by trade negotiator Liu He, could visit Washington at the end of September. Senior administration officials have discussed such a trip, but nothing is locked in.

The bottom line: During the 2.5 years of his presidency, Trump has fundamentally changed how the world's top two economies relate to each other. And his advisers think there's no going back.

Go deeper

19 mins ago - Health

Treasury begins dispersing $350 billion in COVID relief funding to states and localities

Treasury Secretary Janet Yellen. Photo: Tasos Katopodis/UPI/Bloomberg via Getty Images

The U.S. Treasury on Monday began giving state and local governments access to $350 billion in emergency funding from the American Rescue Plan, the department announced Monday.

Why it matters: Though the money is aimed at helping state, local, territorial and tribal governments recover from the pandemic's economic fallout, the administration will generally give them wide latitude on how they can use the funds.

Game developers break silence around salaries

Illustration: Annelise Capossela/Axios

Developers are sharing their salaries on Twitter under the hashtag #GameDevPaidMe to encourage pay transparency in their industry.

The big picture: The hashtag started circulating last year, but has returned periodically as developers fight for better working conditions. Salary sharing is a way to equalize the field. By removing the secrecy, as well as the stigma, around discussing pay, workers have more power to advocate for themselves when negotiating salaries and raises.

46 mins ago - World

Jerusalem crisis: Hamas fires rockets, Israel begins military campaign

Palestinian protesters and an Israeli police officer near the Damascus Gate. Photo: Amir Levy/Getty Images

Days of tensions in Jerusalem escalated into an exchange of fire on Monday, as Hamas fired dozens of rockets toward Israel and the Israeli military responded with strikes of its own and said it was preparing for a military operation that could last several days.

Why it matters: This is the first time Hamas has fired rockets at Jerusalem since 2014, and the most serious escalation between the Israelis and Palestinians in many months. It comes during the most sensitive days on the calendar — the last days of Ramadan and the Jerusalem Day commemoration on Monday — and amid political crises in both countries.

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