The Xi-Trump Show: A Trade Truce on Shaky Ground

The upcoming summit between Donald Trump and Xi Jinping is a high-stakes poker game, with both leaders playing for significant chips but neither willing to reveal their hand. On the surface, it’s a meeting about trade – specifically, whether the two superpowers will extend their fragile truce, which has thus far averted a major shock to the global economy.

However, scratch beneath the surface and you’ll find a more complex web of interests at play. Trump’s struggling approval ratings have clearly dented his bargaining power, while Xi Jinping’s China has been quietly building momentum in its trade engine over the past four months. This shift in fortunes has tempered expectations for the summit, with Xi seemingly content to extend the truce and buy time for Beijing to fortify itself.

The current situation starkly contrasts with Trump’s initial promises when he returned to office. In 2025, he vowed to use tariffs to address a trade imbalance with China that was “killing” the United States. Since then, his attention has been divided among numerous foreign policy battles, including wars in Iran and Ukraine, disputes with Europe over free speech, and even the ongoing property crisis within China.

Beijing’s export juggernaut continues to roar on, with economists now referring to this phenomenon as “China Shock 2.0.” China’s global trade surplus is on pace to top $1 trillion for a second straight year – a staggering figure that underscores just how far behind the US has fallen in this crucial area.

Xi’s measured approach can be seen by some as pragmatism, but others view it as an attempt to assert dominance over Washington. Scott Kennedy, an expert on the US-China economic relationship at CSIS, notes that the Trump administration “thought they could use massive unilateral pressure to force China to make concessions, and that did not occur.” Today, Xi is undoubtedly calling the shots.

Taiwan Tensions: A Major Issue

Taiwan will likely be a major issue during the summit. US allies in Asia are bracing themselves for Xi’s expected push for Washington to soften its support for the island, with some officials worried that Trump may be tempted to cash in his negotiating chip (a pending $14 billion arms package) for short-term political gains.

Beijing views these relationships as increasingly transactional, according to Wu Xinbo, a professor at Shanghai’s Fudan University who advises China’s foreign ministry. This means Xi is willing to accommodate US concerns on certain issues – such as law enforcement or purchases of US agricultural products – if Washington agrees to ease up on Taiwan.

The Iran Connection: A Test for Trump

The summit also serves as a crucial test for Trump’s ability to exert pressure on Iran to bring an end to the war that has dragged his approval rating to historic lows. Xi is uniquely positioned to help mediate this situation, but Beijing’s recent sales of billions of dollars’ worth of goods to Tehran through sanctions-evasion schemes suggest otherwise.

In this context, it’s clear that Trump’s strategy is focused on maintaining stability in the relationship – a stance that also suits Xi Jinping. As Ruby Osman from the Tony Blair Institute for Global Change notes, “Both Xi and Trump feel it’s quite helpful to have stability in the relationship so they can focus on more pressing things.” For Trump, this means keeping his energies directed at Iran; for Xi, it’s about building out China’s domestic resilience for whatever comes after Trump.

Ultimately, the outcome of this summit will be a closely watched indicator of just how much influence both leaders truly possess. Can Xi Jinping’s trade engine continue to roar without any significant concessions from Washington? Will Trump manage to extract meaningful agreements on Taiwan or Iran?

One thing is certain: only time will tell which hand these two high-stakes players hold, and whether their carefully crafted facade can withstand the intense scrutiny that comes with this high-stakes game.