What Do the United States and China Want from the Meeting Between Trump and Xi?

SadaNews Economy - Three questions loom regarding US-China relations after the recent escalation in trade tensions. Will US President Donald Trump meet with his Chinese counterpart Xi Jinping this month as previously expected? If so, what will they discuss? And is there any chance of reaching an agreement to reduce tariffs and tensions?

Washington says the meeting between the two leaders is likely. If it happens, they are expected to discuss a range of issues, from US export controls on high-quality semiconductors to Chinese purchases of US soybeans and Boeing planes.

The likelihood of reaching an agreement is slim, with the baseline expectation being that both sides may extend the tariff truce for possibly more than 90 days without agreeing on anything else. In a less likely scenario, the two leaders may outline a framework for an agreement and leave the details to be worked out later.

China and the United States' Efforts

Beijing is likely to seek to lift US restrictions on high-bandwidth memory, which is essential for producing artificial intelligence chips. China's capabilities remain limited, and it remains unclear whether local manufacturers such as ChangXin Memory Technologies will have the capacity and technical ability to support Huawei's higher production targets.

Beijing may also seek to obtain first-rate artificial intelligence chips—and Washington may be more amenable to that than in previous years. Trump has previously indicated he might consider allowing Nvidia to sell an advanced export version of its "Blackwell" chip to China as part of his administration's efforts to maintain US influence and market share. The Blackwell chip significantly outperforms anything currently available to China.

China may also seek to freeze the implementation of upcoming US restrictions, including those targeting its access to cloud computing. Chinese companies have used cloud computing to circumvent US export controls on advanced hardware.

If the US implements new export controls between now and the meeting between Trump and Xi, as it did before talks earlier this year in London, it is likely to push Beijing toward removal as well. Trump recently threatened to restrict "critical software," but he has not yet announced any specific measures.

For its part, Washington will seek commitments that China's recently announced expanded export oversight rules on rare metals and related technologies will not disrupt American manufacturers and that export licenses will be expedited.

The US is likely to push for China to purchase US agricultural goods, especially soybeans, which is a political priority for Trump, and it is said that negotiations to sell China up to 500 Boeing planes are in the final stages. Trump may also urge Xi to resume imports of US energy products, which ceased in early February when the US imposed the first round of tariffs on China during Trump's second term.

Trump may request increased access for US companies to the Chinese market, a recurring discussion point for the US with China, specifically focusing on US companies' compliance with Chinese laws (such as the Foreign Sanctions Evaders Act and anti-espionage laws), entry barriers, and what they describe as inconsistent and opaque enforcement of regulations.

The Trump administration may also push Beijing to undertake reforms aimed at protecting intellectual property, technology transfer, industrial support, and other US concerns outlined in this year's National Trade Estimate by the US Trade Representative.

China is likely to advocate for tariff rate reductions, especially on fentanyl at 20%, which accounts for nearly half of China's current export burden to the US. China may prefer to reduce its tariff rates to the global average of 13.1%, or at least align with the rates of other Asia-Pacific economies, approximately 20%.

If the US continues to focus on reducing its relative dependence on imports from China, there will not be much room for tariff reductions. However, China's leverage in critical minerals and Trump's willingness to strike deals may pave the way for deeper reductions.

In return, the US might secure commitments from China to purchase more soybeans and other American goods, and even take steps toward improving access to markets and conditions for US companies.

However, implementing these promises may prove more difficult, as the US Trade Representative's office concluded that China has not met its commitments under the first-phase trade agreement that Trump signed with Beijing during his first term.

Chinese Investments in America

Media reports indicate that Beijing has offered the US new investments worth a trillion dollars, likely focusing on less sensitive sectors such as consumer goods manufacturing or clean energy supply chains, where Chinese capital and know-how can enhance efforts to bring manufacturing back to US soil in areas where Beijing feels comfortable entering the US market and can control its intellectual property.

The Trump administration has broad authority regarding the approval of such investments or imposing conditions on them. Due to its deal-focused approach, Washington may accept limited Chinese funding in low-risk industries if it can demand mutual benefits in return. However, skepticism from both parties, state-level restrictions, and the risk of future reviews or forced divestments make a broader reopening unlikely.

Fentanyl, TikTok, and Taiwan

Trump may also press Xi for some concessions related to fentanyl. In the past, the Trump administration has asked Beijing to execute drug traffickers, publicize the campaign against materials used to produce fentanyl via the Chinese Communist Party’s main media outlets, and tighten control over specific chemicals. The previous two actions are unlikely, but Beijing may be willing to expand its control over commonly used materials for producing fentanyl as it has done in the past.

Finalizing the TikTok deal is likely to be on the agenda. Trump has claimed credit for "saving" the app, signing an executive order on September 25 that paved the way for a partial acquisition by private sector entities of its operations in the US. However, Beijing has not confirmed the terms, and key questions remain, including who will control the TikTok algorithm.

In the past, the US often raised concerns about China’s human rights practices, its activities in the South China Sea, and other security issues. However, Trump is unlikely to prioritize these concerns or press Xi on them.

Trump may raise the issue of Russia’s war in Ukraine and encourage Xi to use his influence with Putin to push for an end to the war, as he likely did in previous talks with Xi.

For its part, Beijing is expected to seek adjustments in the administration's approach to Taiwan, particularly concerning US military aid and arms sales. Reports also indicate that China may urge Trump to take a stronger stand on Taiwan's independence, although such a request is unlikely to be brought up at the leaders' level.

What Can Be Achieved During the Trump-Xi Meeting?

Overall, all of the above suggests a narrow margin for agreement between the two parties as the time available for both to reach an accord is decreasing. This increases the likelihood that the leaders may simply agree to extend the tariff truce that both countries reached in May, which is set to expire in November.

Alternatively, Trump may announce a framework for an agreement, as he has done with Europe, Japan, and other countries, leaving the details for discussion later. The third possibility is a continued escalation of tensions, which would undermine the chances of holding a meeting or achieving any breakthroughs.