U.S. venture capital (VC) firms are redirecting their investments toward defense technology and industrial development due to increasing trade restrictions with China. The move comes after years of political tensions led to numerous sanctions and trade restrictions between the two largest economies. With the Chinese tech market becoming riskier, VCs are finding new opportunities on their home turf, as the U.S. government actively encourages investments in semiconductors and other critical industries. This shift in focus is driven by a desire to protect U.S. values and recognize defense technology’s growing potential and impact. The tech community is also more open to working with the government on defense contracts.