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Industry Opinion
Is America Benefiting from the Trump-Xi Meeting
By Nironjan Roy, CPA, CMA — Certified Anti-money laundering Specialist and Banker
During Trump’s recent Asia visit, the heads of the world’s two superpowers and largest economies, Donald Trump and Xi Jinping, met in person, from where positive signals have been heralded toward restoring normalcy in international trade. Economists, supply chain experts, financial analysts, and even think tanks had been focusing on this summit and analysing the various aspects of the trade consensus reached at the meeting between two world leaders. So far, mixed reactions have been received, with one group very optimistic about a positive outcome and another still skeptical about future trade relations.
As reported in the media, the meeting covered multiple areas, with tariffs the most dominant. It lowered the fentanyl-related tariff on Chinese goods to 10% from 20%, bringing down the average tariff rate on many Chinese goods from 57% to 47%. In exchange, Xi has agreed to implement strict controls and ensure compliance with standards for the use of chemicals in drug production. There have been serious allegations from the U.S. side against China for the uncontrolled use of a synthetic oil to make a drug that has been blamed for hundreds of overdose deaths in the USA. Although the fentanyl issue seems to have apparently resolved during the summit, neither side has disclosed any specific decision. However, it is learned that as a follow-up measure, FBI Director Kash Patel is expected to visit China soon to discuss the fentanyl issue with Chinese authorities.
The meeting appears to have been fruitful, but some long-standing unresolved issues remain. U.S. manufacturers have been facing significant difficulties due to supply interruptions of rare-earth minerals, which are the most important raw materials for producing a wide range of devices and equipment, from electric vehicles to jet fighters.
During the meeting, Chinese President Xi agreed to withdraw control over rare-earth mineral exports to the U.S., but licensing restrictions remain in place. Export controls on rare-earth minerals were the most effective weapon the Chinese government has used to counter Trump’s high reciprocal tariffs on Chinese goods. Withdrawing export control and keeping licensing requirements in place may not effectively resolve the issue, so U.S. manufacturers will have to go through the most complicated process of importing this raw material, which will not only delay the shipment but also keep the uncertainty over the steady supply, which may trigger the escalation of the trade war at any time.
During the meeting, China agreed to import 12 million metric tons of American soybeans during the current season and an additional 25 million tons every year for the next three years, i.e., during Trump’s remaining tenure, which the Trump administration was pressing for as part of boosting U.S. exports and thus reducing the negative trade deficit. This decision is considered a good achievement of the Trump administration as Treasury Secretary, Scott Bessent, while talking to the newsman, said, “Our great soybean farmers, whom the Chinese used as political pawns – that’s off the table, should prosper in the years to come”. Although the Trump administration has claimed China’s soybean imports from the U.S. as a victory, the deal is a win-win. Because China is the world’s largest soybean consumer, it is also in desperate need of imports from the U.S.
As an outcome of the meeting, the overall tariff on Chinese goods has been reduced to 47%, which is still higher than in other countries. This tariff reduction will slash consumer prices in the USA, but overall prices will remain very high, as they are still affected by higher tariffs on Chinese products and those from other countries, so pressure on consumer spending will remain high. In the wake of the escalation of tariff and non-tariff tension between the U.S. and China, many businesses have already relocated their supply source from China to other countries, including Vietnam, Cambodia, and India, so the meeting outcome is not strong enough to change their decision. Even some of the core dispute issues, including China’s trade surplus, business subsidies, and technological dominance, remain unresolved.
Nironjanm Roy
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The Trump–Xi meeting seems to have produced positive results toward de-escalating tension between the two largest economies in the world. As reported in the media, some experts have rated this meeting 10 out of 12 on a scale, which is a very high standard. However, the real outcome does not support the view that the trade war between the U.S. and China has normalized. The U.S. and China are the largest trade rivals, so strategy prevails over a friendly approach. Since Trump announced higher reciprocal tariffs, trade tensions between the U.S. and China have taken on a different dimension than in other countries, including close military allies and neighbors, such as Canada and NATO members.
The Trump Administration has paused tariff decisions against other countries while announcing the truce against China. A truce is the time for warring parties to reorganize and redesign their strategy, which both the US and China have been doing over the last eight months, as reflected in the meeting between Trump and Xi.
Therefore, Wendy Cutler, a former U.S. trade negotiator and currently at the Asia Society Policy Institute in Washington, has rightly said that this truce is positive for now, but we should all expect tensions to escalate in the future. The meeting between Trump and Xi was very friendly, with both exchanging kind words, but the outcome is unclear aside from a 10% tariff reduction in exchange for soybean exports. Core disputing issues remain unresolved, which may trigger escalation at any time.
Therefore, it is very difficult to claim that Americans have benefited from this highest-level meeting. In fact, both the U.S. and China’s economies have already positioned themselves in a highly competitive and strategic state, so mere discussion or meetings may not yield a positive result for Americans. A strategic approach comprising short-, mid-, and long-term initiatives, with supply source diversification, may be pursued to ensure a steady supply and support small- and medium-sized businesses.
The Trump Administration has paused tariff decisions against other countries while announcing the truce against China. A truce is the time for warring parties to reorganize and redesign their strategy, which both the US and China have been doing over the last eight months, as reflected in the meeting between Trump and Xi.
Therefore, Wendy Cutler, a former U.S. trade negotiator and currently at the Asia Society Policy Institute in Washington, has rightly said that this truce is positive for now, but we should all expect tensions to escalate in the future. The meeting between Trump and Xi was very friendly, with both exchanging kind words, but the outcome is unclear aside from a 10% tariff reduction in exchange for soybean exports. Core disputing issues remain unresolved, which may trigger escalation at any time.
Therefore, it is very difficult to claim that Americans have benefited from this highest-level meeting. In fact, both the U.S. and China’s economies have already positioned themselves in a highly competitive and strategic state, so mere discussion or meetings may not yield a positive result for Americans. A strategic approach comprising short-, mid-, and long-term initiatives, with supply source diversification, may be pursued to ensure a steady supply and support small- and medium-sized businesses.