As Trump heads to Beijing on May 14-15, two terms of tariff policy have narrowed trade deficits but failed to restructure China's economy or restore US strategic credibility.

Key Highlights

  • Trump's confirmed May 14-15 Beijing summit with Xi Jinping marks the first US presidential visit to China in eight years, originally delayed by the Iran war.
  • US tariffs on Chinese goods reached 145% in Trump's second term, far exceeding the 20% average rate from his first-term trade war.
  • China fulfilled only 58% of its purchase commitments under the 2020 Phase One deal, a structural warning that managed trade frameworks deliver limited durable results.
  • Inter-agency policy contradictions on semiconductors, export controls, and sanctions have eroded US credibility and disrupted investor planning horizons.
  • China enters the May summit with consolidated leverage across rare earths, regional diplomacy, and technology negotiations, having used the Iran war delay to its strategic advantage.

Beijing Bound: A Summit Freighted With Consequence

With fewer than four weeks remaining before Air Force One touches down in Beijing, the May 14-15 summit between President Donald Trump and President Xi Jinping has crystallised into the most consequential bilateral meeting in nearly a decade. The visit was originally scheduled for late March but was pushed back as the US-led war against Iran dragged on, with the White House confirming revised dates only in late March.

The summit arrives against a notable reversal of fortunes. Whereas Trump appeared to hold the upper hand following the Liberation Day tariffs of April 2025, the opposite now holds as the two leaders prepare to meet. Understanding how that reversal occurred requires examining not just the past year, but the full arc of Trump's approach to China across both of his terms in office.

A Pattern Established in the First Term

Trump's confrontation with Beijing is not a second-term invention. Beginning in 2018, his first administration initiated the most significant restructuring of US-China trade relations in a generation. By the end of his first term, each country had raised average duties on the other to roughly 20%, with new tariffs and counter-tariffs covering more than half of bilateral trade.

The culmination of that effort, the Phase One agreement signed in January 2020, carried ambitious purchase commitments but delivered limited structural change. China committed to purchasing an additional $200 billion of US goods over two years, but US manufacturing exports continued to suffer, falling 43% short of the legal commitment for 2020. The deal halted tariff escalation but left the architecture of China's state-directed economy entirely intact.

The Biden administration retained most of those tariffs and added sweeping semiconductor export controls in October 2022. Yet the structural trade deficit and technology competition remained unresolved when Trump returned to office in 2025, inheriting a rivalry that seven years of tariff policy had pressured but not transformed.

Second Term: Greater Aggression, Familiar Limits

Trump's second term opened with considerably greater force. Tariffs on Chinese goods were pushed to 145%, more than seven times the effective rate at the end of his first term. Beijing did not comply. It retaliated, threatened to restrict rare earth supplies essential to US defence and semiconductor industries, and forced Washington to pause export control expansions and planned port fees on Chinese-built vessels. A February Supreme Court ruling invalidating several tariff authorities further constrained the administration's leverage.

The economic results mirror first-term outcomes. The US goods trade deficit with China narrowed 32% to approximately $202 billion in 2025, a headline figure the administration cites as progress. However, the United States lost approximately 91,000 manufacturing jobs between February and December of that year. Tariff unpredictability, more than tariff levels, suppresses long-duration capital investment. When policy can reverse within a single news cycle, reshoring decisions carry execution risk that most manufacturers are unwilling to absorb.

Policy incoherence has compounded the problem. Within a 30-minute window in late 2024, the US Justice Department publicly characterised Chinese access to advanced Nvidia H200 chips as a national security threat while the President simultaneously approved their sale via social media. The episode exposed not a communication failure but a fundamental absence of interagency coordination on technology export policy, precisely the domain where allied partners, including Japan, the Netherlands, and South Korea, have aligned their own controls with Washington's framework.

China's Leverage and the Pre-Summit Positioning

Beijing has used both terms to methodically accumulate structural leverage. Its control of approximately 85 to 90 percent of global rare earth refining capacity has proved decisive. The issue of China's export restrictions on rare earths, which nearly derailed bilateral relations in 2025, appears to be advancing at the ministerial level ahead of the summit.

China's diplomatic preparation has been equally deliberate. Chinese Foreign Minister Wang Yi concluded a two-day visit to North Korea in early April, his first trip to Pyongyang in more than six years, as part of broader activity designed to shape the regional environment ahead of the summit and capitalise on Washington's focus on the Middle East. Russian Foreign Minister Sergei Lavrov also visited Beijing, with Moscow signalling willingness to expand energy cooperation and fill resource gaps created by Middle Eastern supply instability.

On trade and technology, Beijing is seeking relief from US export controls in semiconductors and artificial intelligence, removal of sanctions on hundreds of firms, and reduced outbound investment restrictions, while offering increased purchases of US agricultural products, energy, and aircraft as negotiating instruments. This posture closely mirrors Phase One, raising the risk of replicating a purchase-commitment model that failed between 2020 and 2021.

What the Summit Can Realistically Deliver

Serious negotiations are likely to follow rather than precede any agreement reached between the two presidents, a dynamic that plays to Beijing's advantage. The US shift toward managed trade rather than structural reform reflects a recalibration of ambition. For institutional investors, even a limited framework stabilising tariff levels and clarifying technology export boundaries would reduce near-term supply chain and equity valuation uncertainty. The first-term precedent, however, suggests that ambiguity and incomplete enforcement are persistent features of any agreement concluded under political and time pressure.

Both Washington and Beijing share an interest in a stable bilateral relationship. The critical question is which side extracts greater concessions. With two full terms of evidence now available, that question remains unanswered in America's favour. Capital markets pricing long-duration assets in manufacturing, infrastructure, and technology must contend with a rivalry where improvisation has consistently displaced strategy, and where each summit produces a truce rather than a resolution.