US President Donald Trump will host Chinese leader Xi Jinping this Thursday. This meeting has the potential to reshape the global trading environment for cooperation, not conflict. Following ten months of escalating tariffs and economic uncertainty, both leaders appear closer than ever to reaching a trade agreement. This meeting occurs against the backdrop of heavy tariffs, regulatory investigations, and geopolitical plays that have marked their relationship to date.
In February, Trump slapped a new 10% tariff on all Chinese imports, stacked on top of existing tariffs imposed during his prior administration. This increase raised the total US tariffs on Chinese goods in retaliation to an astounding 145%. At the same time, China countered with its own tariffs, maxing out at 125%. These tit for tat tariffs have embroiled thousands in the business, large and small, in an intricate maze of economic hostility across the globe.
Trump sought to sever connections between US companies and Chinese manufacturing. Implementation has been thwarted at every turn by a slew of exemptions. In reality, most companies figured out ways around the tariffs—finding structural strategies that let them maintain access to Chinese production capabilities.
A tentative ceasefire was reached in June enabling both countries to enter negotiations. Today, they stare down an upcoming, at times contentious, meeting with hopes of finding a agreeable resolution. The path remains fraught with challenges. Only a few days before, Trump had threatened to slap an additional 34% tariff on Chinese imports. He wanted to put the most pressure possible on Beijing during what he called “Liberation Day.”
In retaliation, China has implemented several of its own counters. Just last month, Beijing opened an anti-monopoly investigation into Nvidia, deepening the chill on the tech front. Analysts suggest that Xi Jinping aims to enter the talks with a strong hand, especially as the US implements tech curbs that threaten to stifle China’s technological advancements.
China’s current strategy looks like a solid game plan for long-term growth. Many analysts believe that the nation is investing significantly in developing industries that are less reliant on Western technologies and markets. This strategy would field an excellent counter to the mounting limitations continuously placed by the US. This is particularly important for rare earth elements, which are essential to a number of high-tech industries.
Here’s what US Treasury Secretary Scott Bessent had to say about the crisis. He explained why he didn’t anticipate the 100% levy Trump had once threatened to actually materialize. He emphasized the importance of the upcoming talks: “The two sides must engage to address their respective concerns.”
As the meeting approaches, both leaders will need to navigate the complex landscape of tariffs, trade barriers, and technological competition. Xi would love to find relief from these restrictions on chip sales to China. This concern has turned into one of the main sticking points in the current US/China trade war.
The stakes are high for both nations. Trump’s administration appears to be reacting to mounting pressures from domestic industries injured by retaliatory tariffs. At the same time, China is dealing with the effects of its own slowing economic growth and international pressures.
As both sides prepare for negotiations, there is cautious optimism about potential breakthroughs. Prof. Tim Harcourt, Chief Economist of the Department of Foreign Affairs and Trade, underscored the significance of this meeting. He added, “This is the meeting that redefines globalization in a post-Covid world.”