The Biden administration has taken US-China relations to a low not seen since before Richard Nixon went to China. Last October, the US Commerce Department banned all companies, even foreign ones, from selling advanced semiconductor technologies to China. The goal is to thwart Beijing’s military, artificial intelligence and supercomputing prowess. This unprecedented move means even companies based outside the United States cannot sell to China if their products contain US-origin technologies. Such extreme sanctions upset the geopolitical status quo. Whether they work in the long run is an open question. But a more immediate question is this: can we assume American allies will fully cooperate? My bet is, the Biden administration has overplayed its hand. If recent US sanctions on Russia offer any clues, the chip sanctions are likely to fail. India, Spain, the Netherland and Japan – democratic nations all – have increased their imports from Russia since its invasion of Ukraine. No doubt Moscow’s invasion of Ukraine may have strengthened the European Union’s resolve to confront China. As European political analyst Jessica Berlin said: “[Vladimir] Putin has done Xi [Jinping] no favours. It’s clear that there can be no more ‘business as usual’ with hostile dictatorships.” Regarding the Biden sanctions, Berlin added: “European governments that might have opposed this move a year ago get it now.” For the sanctions to succeed, however, the US must have buy-in from four others at the centre of semiconductor supply chains: Japan, South Korea, the Netherlands and Taiwan. Japan and the Netherlands last month agreed to sanction China, but no specifics were mentioned. Dutch Prime Minister Mark Rutte said : “This is such a sensitive topic that the Dutch government chooses to communicate diligently, and that means that we only communicate in a very limited way.” Japan, however, sees China as a clear and present danger. It has declared plans for “counterstrike” military capabilities that could hit China in the event of a conflict. The threat of a mainland China attack on Taiwan lends impetus to Japan’s limiting of China’s advanced chip-making prowess. But don’t expect Tokyo to say much, even after the embargo details are worked out. The deal’s hush-hush nature sends clear signals that both countries are walking a fine line: appeasing long-time ally America while avoiding tensions with China, an increasingly important trading partner. Expect a muted and highly water-downed version of Biden’s wish list. The Dutch government, for instance, might permit ASML to continue selling second-generation machines to China but not the most advanced systems, more obviously needed for artificial intelligence and military applications. While China accounted for about 15 per cent of ASML’s sales, Japan’s largest semiconductor firm Tokyo Electron, for instance, would suffer immensely as almost 30 per cent of its revenue comes from China. Expect other Japanese companies – Nikon , Advantest and Lasertec – to take big hits too. US sanctions prohibit Americans from providing certain services in Chinese semiconductor factories. Although ASML has pulled its American employees from China, it’s doubtful that Japanese and Dutch staff performing maintenance at Chinese fabrication plants will be recalled. Any such move would escalate tensions with Beijing. US-China chip war will end with small victories and losers all around With both countries reportedly likely to take “months” to finalise the sanctions, the delay provides time for backchannel talks with China to limit the sting. These workarounds might include a deadline for sanctions to wane or end, a promise not to disrupt the production of non-military-related chips, or an exemption for future sales of advanced equipment to Chinese-owned fabs in places like Vietnam or Africa. Finally, with sanctions only applying to products that incorporate US-origin technologies, there is an obvious loophole. Companies are vetting a “de-Americanisation” option, producing prototypes and reconfiguring supply chains accordingly. John Tu, president of Kingston Technology, the world’s largest independent producer of DRAM memory modules, said the likes of ASML, Tokyo Electron and Nikon could, within the next five years, develop cutting-edge semiconductor equipment without using any US technology. Even diluted, the sanctions would hit China hard . Paul Triolo, a China expert who analyses global technology policy at Albright Stonebridge Group, said the sanctions will force China “to scramble to find alternatives, but it will take some time for them to continue innovating near the leading edge. This is probably a five to 10-year process”. Triolo estimates that China is three or four generations behind cutting-edge technologies. Sanctions will prevent Chinese firms from catching up, never mind evolve with the industry. But countries will pay a hefty price for embracing the sanctions, even in modified form. China is Japan’s leading trade partner. Beijing, known for tit-for-tat countermeasures, could easily send Japan’s economy into a tailspin. Be ready to face China wrath over chip export curbs, Japan lawmaker says The Netherlands faces a similar dilemma , notes Henk Volberda of the Amsterdam Business School. Volberda, whose research has focused on globalisation and economic competition, contends that “the Dutch government is afraid of strong reactions from the Chinese when we tighten export restrictions. This would harm our economy and national income”. America’s most trusted allies are being forced to make tough geopolitical and economic decisions. As the failed Russian export controls show, most countries ultimately choose pragmatism over idealism, profits over protectionism, and sovereignty over security alliances. There is a reasonable chance those same countries will cave in to domestic pressure amid a looming world recession and a glut in semiconductor chips and eventually let their chip makers sell freely to the Middle Kingdom. That is certainly not what the Biden administration wants to hear, but it is a fair assessment of America’s diplomatic sway and China’s market power. Stanley Chao served as executive vice-president from 1994-98 for Kingston Technology, the largest independent producer of DRAM memory modules. He is currently the managing director for All In Consulting, assisting companies in their China business strategies