Donald Trump will host his “good friend” Xi Jinping in Washington this week for a summit aimed at solving the world’s problems.
Spoiler alert: Nothing substantive will come of the meeting, although Trump will swear otherwise while demonstrating his incurable penchant for coddling dictators. (“A great many important things were discussed!” “Some people call him ‘The King of China’ because he’s president for life” Etc, etc.)
The last face-to-face between Trump and Xi found the latter warning his counterpart against “mishandling” the Taiwan issue. Xi delineated the stakes in stark terms. “The Taiwan question is the most important issue in China-US relations,” he told Trump in May, lecturing the US delegation in the Great Hall of the People.
“If [Taiwan] is handled properly, the bilateral relationship will enjoy overall stability,” Xi carried on. “Otherwise, the two countries will have clashes and even conflicts, putting the entire relationship in great jeopardy.”
At the same May summit, Xi inaugurated a new framework for the superpower bilateral: “Constructive strategic stability.” Sino-US relations should be defined “primarily by cooperation,” he preached. Competition should be “well-regulated” and differences “manageable.”
Since the brief imposition of triple-digit tariffs on China during the spring of 2025, Trump’s gone out of his way to avoid rankling Xi. Or perhaps it’s more accurate to say he hasn’t gone out of his way to antagonize the dragon, the same way he’s badgered, bullied and, in one instance, kidnapped other world leaders.
Trump’s relatively accommodative approach makes for a remarkable juxtaposition with Beijing’s “winning” ways on trade. As the figure below reminds you, China’s on track for a second straight $1 trillion annual surplus.
The yawning gap’s attributable to a variety of factors, but the fundamental driver’s an underlying mismatch between China’s manufacturing capacity and lackluster domestic demand.
Last week, while urging the Fed to cut rates, Trump reiterated his threat to stop trading with countries that run a surplus with America. “The word ‘Deficit’ is nothing more than a fancy word for LOSS,” he said. That’s obviously (objectively) false, but if you accept it, a corollary says China’s pacing for another record WIN.
2015 campaign trail Trump was going to “fix” that situation, just like 2023 campaign trail Trump was going to fix inflation. But here we are. China’s trade imbalance with the US hit $29 billion in August, the highest of Trump’s second term.
The White House’s latest idea involves a special, 7.5% tariff justified by a 301 investigation into China’s habitual countenancing of excess capacity. That prospective duty’s part of Trump’s belabored effort to rebuild the IEEPA tariff wall toppled early this year by the Supreme Court. The accompanying report on excess capacity was delayed, though, apparently to avoid irritating the Chinese ahead of this week’s proceedings in Washington.
Most observers expect Trump and Xi to extend an existing trade truce ahead of the détente’s one-year anniversary next month. If that is indeed an outcome of the Washington summit, it’ll be a relief: The last thing a world bedeviled by rolling supply shocks needs is another escalatory phase in US-China trade tensions. And I doubt seriously Trump wants to escalate ahead of the mid-terms.
Other issues on the table this week include AI safety (Trump over the weekend polled the audience on a rebranding initiative that’d replace the term “Artificial Intelligence” with “Superior Intelligence,” “Extreme Intelligence,” or “Supreme Intelligence”) and Beijing’s support for Moscow and Tehran. Don’t expect Trump to press Xi on the PLA’s alleged targeting assistance for IRGC attacks on US military assets and personnel in the Gulf.
Bottom line: Xi will get the royal treatment from Trump in Washington, and in all likelihood the meeting will produce little (read: nothing) more than the above-mentioned truce extension and the usual nebulous promises from China to purchase US energy and farm products.
Trump will personally greet Xi and his wife, Peng Liyuan, at Joint Base Andrews on Wednesday. Note that when Trump traveled to Beijing in May, Xi dispatched Vice President Han Zheng to the tarmac. Han isn’t anywhere near the top of the CCP pyramid, ranking a distant eighth in the party hierarchy.
As surprising a it might seem, for now Xi may be Trump’s best ally. He’s not asking for money, not overtly a threat to us, still a useful economic force, and not hanging out with the Israelis.