President Donald Trump and Chinese leader Xi Jinping meet in Washington this week to shore up their fragile trade truce, which expires Nov. 10. AI policy, an Iran sanctions push and unresolved tariffs threaten to complicate the talks, even as the two sides continue to trade accusations and retaliatory trade actions.
Trump and Xi are holding their second face-to-face summit this year, and analysts expect the two leaders to settle for a modest outcome: extending the trade truce rather than resolving the underlying disputes. Bank of America Global Research analysts called a one-year extension their "base case" in a client note, which would freeze tariffs at current levels and block new export controls.
Tariffs stay elevated despite the truce
Last year's trade war pushed U.S. tariffs on Chinese goods to 145% at the peak, while Beijing's retaliatory duties reached 125%. Negotiators slashed those levies in May 2025, then extended the truce again in August, and Trump and Xi struck a broader agreement in Busan that further scaled back the measures.
Even so, both countries keep tariffs high. The effective U.S. tariff rate on Chinese products stood at 22.8% as of July, according to the Penn Wharton Budget Model, the highest among major U.S. trading partners. The Congressional Research Service put the U.S. average rate on China even higher, at roughly 36.5%, versus Beijing's 31% rate on U.S. goods. Meanwhile, the U.S. goods trade deficit with China this year still runs near $91.2 billion, among the highest in the world.
Treasury Secretary Scott Bessent said Monday the two sides discussed a reciprocal $30 billion tariff reduction that Beijing floated earlier this month, under which the U.S. would sell agriculture, energy and medical devices while China ships in more everyday goods. China could also agree to buy more Boeing aircraft, after confirming a 200-plane purchase following the Beijing summit in May.
AI and Iran complicate the agenda
Bessent has said artificial intelligence will top the agenda, and Bessent said Sunday the two sides discussed establishing a dialogue to notify each other of AI incidents. Trump has pushed for AI buildout with minimal regulation, though he said Monday the government would rein things in if it has to, a possible softening ahead of the talks.
Iran also looms after the U.S. moved last month to intensify sanctions pressure on Tehran's financial enablers, a campaign that has put China, Iran's top trading partner, in the spotlight. Bessent said Monday the two sides held quiet, behind-the-scenes discussions on the sanctions over the weekend, adding that Chinese financial authorities have been very engaged in the process.
China expert Claire Reade of the Center for Strategic and International Studies described the diplomatic picture as unsettled: According to CNBC: "A number of inconsistent viewpoints seem to be jostling each other".
Source: CNBC
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