The United States believed it had found China’s Achilles’ heel. By restricting access to NVIDIA’s most advanced AI chips, Washington aimed to halt Beijing’s progress in artificial intelligence, cutting off the critical hardware needed to train next-generation models. The logic was simple: no high-end semiconductors, no competitive AI industry. But instead of stalling, China adapted. And in doing so, it may have permanently changed the balance of technological power.

The unexpected result was DeepSeek—a breakthrough AI model developed without the cutting-edge chips that Washington had locked away. This wasn’t supposed to happen. The assumption had been that China’s AI capabilities were fundamentally dependent on Western technology. But necessity has a way of accelerating self-sufficiency. DeepSeek proved that China could push forward despite the blockade, building more efficient algorithms that did more with less.

Intriguingly, questions remain about just how independent this breakthrough really was. Sanctions were meant to cut China off, but reports indicate it still secures NVIDIA chips through intermediaries like Singapore. If true, China isn’t defying the blockade, it’s exploiting its cracks. Either way, its AI push remains unstoppable.

 This is not an isolated case. When the US blacklisted Huawei, it was meant to cripple China’s ability to produce advanced smartphones and telecommunications equipment. Instead, Huawei developed its own 7nm chip—an achievement Western analysts claimed was years away. When China was denied Western jet engines for its J-20 fighter jets, it built its own. The pattern is unmistakable: every attempt to suppress China’s rise has only forced it to become more self-reliant.

In the 1980s, the US used trade deals, currency manipulation, and semiconductor restrictions to contain Japan’s rise in high-tech industries. Japan, boxed in by American pressure, never fully regained its momentum. But China isn’t Japan. It is larger, politically independent, and far less willing to play by Washington’s rules.

 Now, the battle is escalating. In January 2025, Washington imposed even stricter export controls, expanding previous restrictions to cut off more advanced AI chips and semiconductor manufacturing equipment from reaching China. But China responded in kind. In a strategic countermeasure, Beijing announced restrictions on exports of key semiconductor materials, including gallium and germanium—both critical for chip production. The US wanted to control China’s technological supply chain, but now it finds itself vulnerable to China’s own leverage over raw materials.

It turns out that such sanctions are only effective under certain conditions. It works when a nation is financially entangled with the country imposing the restrictions. But China had spent decades insulating itself from US financial control. It works when a country depends on foreign technology with no way to replace it—but China has spent years preparing for that possibility. And it works when a country lacks alternatives—but global supply chains are shifting in unexpected ways.

One of the biggest shifts is happening just beyond the US border. Mexico, once seen as firmly within Washington’s economic sphere, has become a key partner for Chinese firms looking to bypass U.S. tariffs. Chinese factories are quietly expanding in northern Mexico, leveraging trade agreements to access American markets in ways that blunt the impact of US restrictions. Western companies, too, are rethinking their strategies. What was once the "China Plus One" approach—diversifying supply chains to reduce dependence on China—has evolved into "Anything But China" (ABC), with corporations redirecting production to Vietnam, India, and Latin America. Yet China is adapting even here, embedding itself in alternative supply chains and maintaining its manufacturing dominance in indirect ways.

Recently, President Trump imposed a 25% tariff on imports from Canada and Mexico, citing concerns over illegal immigration and drug trafficking. In response, Mexico deployed 10,000 National Guard troops to its border, while Canada appointed a top official to lead its anti-fentanyl efforts and designated drug cartels as terrorist organizations to address US concerns. 

These actions provided the US administration with a face-saving resolution, allowing for a temporary pause in tariffs. But the aggressive approach left both Canada and Mexico with a sense of unease, prompting them to explore alternative trade alliances—including potential free trade agreements with China—as they look beyond the US in a world where Washington is growing more protectionist and unpredictable.

The fundamental miscalculation is assuming that economic pressure leads to submission. But history suggests otherwise. When an adversary is strong enough, cutting off resources doesn’t weaken them—it forces them to adapt. The US sought to chain the dragon, expecting submission. Instead, it forged a stronger and more resilient adversary.