Trump and Xi Trade Talks: AI, Tariffs and Iran Loom Large

Trade Truce Expiration Date and Current Tariff Realities

The upcoming summit arrives as a Switzerland-brokered trade deal and subsequent Busan agreements approach their expiration date on November 10, just a week after the U.S. election, according to historical trade data. Last year’s trade war saw U.S. levies on Chinese imports hit 145% at their peak, while Beijing’s retaliatory duties reached 125%, before both sides scaled back measures following negotiations. Yet, according to the Penn Wharton Budget Model from the University of Pennsylvania, the effective tariff rate on Chinese products sat at 22.8% as of July, making it the highest among major U.S. trading partners. The Congressional Research Service calculated an even higher average U.S. tariff rate on China at roughly 36.5%, compared to Beijing’s 31% rate on U.S. goods. U.S. Census data shows total goods trade with China fell nearly 30% in 2025, with continued declines through the first seven months of 2026, though the U.S. goods trade deficit with Beijing remains high at approximately $91.2 billion.

Treasury Secretary Scott Bessent and Analyst Expectations for the Washington Summit

Treasury Secretary Scott Bessent stated on CNBC’s “Squawk Box” that President Trump and Xi maintain “great respect” for each other, which trickles down to broader negotiations, though he noted that some deliverables agreed upon in Busan nearly a year ago have not been completely fulfilled by China. Bank of America Global Research analysts noted in a client note that a one-year extension of the trade truce is their base case, maintaining the status quo on tariffs and barring new export controls. Ryan Hass, director of the Brookings Institution’s John L. Thornton China Center, told CNBC that both leaders appear to be managing for small gains and conflict avoidance to signal control to their citizens and reduce mutual dependencies. Meanwhile, Claire Reade, a senior associate with the trustee chair in Chinese business and economics at the Center for Strategic and International Studies, warned that the top-down diplomatic arrangement features inconsistent viewpoints jostling together as Trump dictates overarching policy while letting negative actions occur at margins.

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Artificial Intelligence Competition and Policy Shifts

Artificial intelligence is slated to anchor the top of the agenda as the U.S. and China compete for dominance in the nascent industry. Trump posted on Truth Social that a conspiracy exists against AI and data centers while asserting that the U.S. is leading China and all others. However, after facing concerns from domestic AI executives regarding rapid model development, Trump signaled a slight policy shift on Truth Social by stating that the government will rein things in if necessary. Bessent confirmed that discussions with Chinese officials included establishing a bilateral dialogue to allow both nations to notify each other about AI incidents.

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Iran Sanctions and Diplomatic Pressures

Recent U.S. economic pressure campaigns against Iran have added tension to the diplomatic calendar by placing a direct spotlight on Beijing, Tehran’s top trading partner. While the Trump administration stated that no country is exempt from potential sanctions targeting Iran’s financial enablers, it has not directly targeted Beijing. Bessent reported on CNBC that U.S. and Chinese officials discussed the sanctions during weekend meetings behind closed doors, noting that Chinese financial authorities have remained very engaged in the process.