Trump and Xi Jinping meet in Washington as the US-China trade truce faces fresh pressure, with tariffs, AI competition, rare earths and Iran sanctions all on the table.
Donald Trump and Xi Jinping are set to meet in Washington with trade stability high on the agenda, but the relationship between the world’s two largest economies remains deeply unsettled. From tariffs and rare earths to artificial intelligence and Iran sanctions, the summit comes at a time when economic competition and geopolitical tensions are increasingly intertwined. This is going to be the second face-to-face meeting between Donald Trump and Chinese president Xi Jinping. In May this year, US president Donald Trump visited China.
Both leaders are meeting on the sidelines of the 81st UNGA meeting in New York, where world leaders from over 120 countries have gathered.
The immediate focus is likely to be the fragile US-China trade truce. Washington and Beijing have already pulled back from last year’s tariff escalation, when US tariffs on Chinese goods climbed as high as 145 per cent and China’s retaliatory duties reached 125 per cent. While those rates have since been reduced, significant tariffs remain in place.
The current arrangement is due to expire on November 10, raising the possibility of renewed trade friction unless both sides agree to extend it. China wants greater certainty and fewer tariff barriers, while Washington continues to view the truce as leverage in negotiations. A longer extension could therefore provide temporary stability without resolving the underlying trade dispute.
More from BusinessRare earths are another key pressure point. China has previously used export controls on critical minerals and magnets, while US companies remain dependent on these supplies. Any agreement on trade could therefore extend beyond tariffs to supply chains and strategic commodities.
Then comes AI — perhaps the most consequential new front in the US-China economic rivalry. Trump has repeatedly linked American economic strength to maintaining leadership in artificial intelligence, while Washington continues to restrict China’s access to some advanced semiconductor technologies. The two countries are now discussing whether to establish a mechanism for notifying each other about serious AI incidents.
But cooperation on AI faces a major obstacle: trust. Beijing has rejected US arguments that Chinese AI development represents a grave threat, while Chinese officials have accused Washington of using technology restrictions and safety concerns to constrain China’s technological progress.
Iran adds another layer of complexity. The Trump administration is intensifying economic pressure on Tehran and has warned that countries supporting Iran’s financial network could face sanctions. China, Iran’s major trading partner, has consequently become an important part of Washington’s sanctions calculations. US and Chinese officials have already discussed the issue behind closed doors.
For businesses and markets, the immediate question is whether Trump and Xi can prevent another escalation. Expectations for a sweeping breakthrough remain limited, with analysts instead pointing to a possible extension of the existing trade truce and smaller economic agreements.
The summit, therefore, may be less about resolving the US-China rivalry and more about managing it. Tariffs, technology, critical minerals and Iran are increasingly connected pieces of the same strategic relationship, one in which both Washington and Beijing are trying to protect their economic interests while limiting their vulnerabilities.
