With both sides signalling modest ambitions, markets are unlikely to see a major trade breakthrough from this week’s meeting, reducing the odds of a sharp risk on move tied to US-China relations specifically. The expected extension of the Busan trade truce, due to expire in November, removes a near term tail risk of renewed triple digit tariffs and disrupted rare earths access, both of which weighed heavily on bilateral trade last year. Any progress on the Board of Trade‘s proposed tariff carve outs for up to $30 billion in Chinese exports, spanning US agriculture, energy and medical products alongside Chinese consumer and low tech goods, would be incremental rather than transformative, but could offer modest relief to affected sectors. Currency and equity markets tied to critical minerals and advanced robotics may watch for any signs of friction over FCC import restrictions or US access to critical minerals, though analysts do not expect these issues to derail the broader truce this week.
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With both sides keeping ambitions modest, the Trump-Xi meeting itself, not any single deal, may be the real headline this week.
Summary:
- The US and China have kept expectations low ahead of Xi Jinping’s visit to Washington this week for his meeting with President Trump, with analysts suggesting the visit itself may be the primary outcome.
- Both sides are expected to extend last year’s Busan trade truce, set to expire in November, though other deliverables are likely to be modest.
- US Trade Representative Jamieson Greer said the two countries are not seeking a “comprehensive” deal but aim to “manage” the relationship, potentially through announcements on agricultural trade and nontariff barriers.
- The “Board of Trade,” announced during Trump’s earlier Beijing visit, could see tariff carve outs on up to $30 billion of Chinese exports, covering US agriculture, energy and medical products alongside Chinese consumer and low tech goods.
- Treasury Secretary Scott Bessent said the two sides have agreed to continue an AI dialogue, including a proposed US warning system for sharing AI related national security threats, though analysts are skeptical of a broader agreement this week.
- Beijing is expected to push back on FCC import restrictions targeting advanced robotics, while the US remains dissatisfied over continued challenges accessing critical minerals, though neither issue is expected to derail the truce this week.
US officials have moved to temper expectations ahead of President Trump’s meeting this week with Chinese President Xi Jinping, Xi’s first visit to the United States in more than a decade, with analysts suggesting the meeting itself, rather than any major deliverable, may be the point, Politico reported. Both countries are expected to extend a trade truce reached last year in Busan, South Korea, which is set to expire in November, though other trade outcomes are likely to be more modest.
US Trade Representative Jamieson Greer said earlier this month that the two sides are not pursuing a comprehensive deal but instead aim to manage the bilateral relationship, potentially through announcements on agricultural trade and nontariff barriers. Leland Miller, CEO of China Beige Book, described expectations for the meeting as relatively low, but characterised that as a positive given that preserving stability in the relationship is the primary goal. Edgard Kagan of the Center for Strategic and International Studies said a regular cadence of leader level meetings itself represents progress, given that bilateral trade reached triple digit tariffs at points last year, alongside a collapse in US agricultural sales to China and Beijing’s restriction of rare earth exports critical to US industry.
Among the areas where limited progress could emerge, the US-China Board of Trade, announced during Trump’s earlier visit to Beijing, is seen as a possible vehicle for tariff carve outs covering up to $30 billion of Chinese exports in nonsensitive categories, potentially including US agricultural, energy and medical exports alongside Chinese consumer and low tech goods. On artificial intelligence, Bessent said the two sides have agreed to continue a dialogue, including a US proposal for a warning system to share AI related national security threats, though Miller said there is not yet agreement even within the US administration on what such cooperation should involve, let alone a broader deal. Some US lawmakers, including Representative Ro Khanna, have called for AI safeguards to be prioritised at the meeting, including a ban on self-improving AI systems.
Friction points remain on both sides. Beijing is expected to push back against recent Federal Communications Commission import restrictions targeting advanced robotics, while US officials remain dissatisfied with continued difficulties accessing critical minerals, a topic expected to come up in discussions. Miller said the US will likely eventually lose patience over critical minerals access, though not this week. A separate proposed Board of Investment, also announced during Trump’s Beijing visit, has received less attention, though Mary Lovely of the Peterson Institute said she will watch for any sign the US is warming to Chinese automaker investment in domestic manufacturing, a prospect she described as controversial and one that almost no one currently expects to materialise. Preparations for the visit continued into the weekend, with Greer, Bessent and Chinese Vice Premier He Lifeng meeting in New York on Sunday, alongside a personnel change in Beijing that saw negotiator Li Chenggang elevated to international trade representative.
This article was written by Eamonn Sheridan at investinglive.com.