What The Trump-Xi Summit Will Actually Decide

  • The immediate circumstances surrounding Washington-Beijing bilateral relations entering the April summit[1] bear little resemblance to where they stood 12 months ago. Three developments have fundamentally shifted the near-term balance of advantage. The United States (U.S.) Supreme Court struck down the centrepiece of President Donald Trump’s trade policy. Mainland China has quietly accumulated leverage across multiple fronts, and an active American shooting war has erupted in Iran. Taken together, they have produced the most complex and consequential US-China summit in many years. BMI Fitch analysts believe the summit will proceed, and Beijing will enter it holding its strongest hand in years.
  • The Supreme Court’s 6-3 ruling was not merely a legal setback for Trump; it materially improved China’s negotiating position ahead of the summit. The U.S. effective tariff rate on Chinese goods fell from the low 30s to approximately 21%. That reduction arrived without Beijing conceding anything in return. It was, in structural terms, a windfall. The ruling also created a credibility problem for Washington that goes beyond the arithmetic.
  • Additionally, the geopolitical and economic fallout from ’Operation Epic Fury’ will cast a long shadow over the Trump-Xi summit. Beijing publicly confirmed it received no warning of the strikes. This is seen as a pointed diplomatic signal. It distances Beijing from complicity and also registers displeasure with Washington. But it stops short of anything that would derail the April summit.
  • The communiqué will look substantive but commit to relatively little. In terms of trade and tariffs, the visible trade deliverables will be impressive but largely cosmetic. Soybean purchase commitments, energy deals, and Boeing orders; politically necessary for Trump and structurally cheap for Beijing. China has offered variations of these commitments at every major bilateral meeting. Nevertheless, the real trade question is the extension of the truce beyond its November expiry. Both sides have incentives to extend since neither has fully delivered on previous commitments.
  • Concerning Russian oil, BMI does not expect China to agree to any meaningful reduction in Russian oil purchases. Discounted Russian crude is both economically rational and strategically valuable as insurance against future Western pressure on China’s energy access. Moreover, the Iran and Venezuela campaigns have removed two of China’s cheapest oil sources from easy reach.
  • For technology and artificial intelligence (AI) Chips, the January shift to case-by-case AI chip licensing is seen as the most potentially durable development ahead of the summit. Replacing automatic denials with individual licence evaluation represents a quiet but significant policy shift. Expectations are that Beijing will push hard in April to formalise and expand it.
  • Finally, TikTok remains an underappreciated wildcard. Beijing has demonstrated a clear willingness to use the consumer technology company as a geopolitical instrument, while Trump has demonstrated susceptibility to the personal branding opportunity the deal offers. Outstanding implementation questions could resurface either as a sweetener or as renewed leverage, depending on how other issues on the agenda resolve.

(Source: BMI, A Fitch Solutions Company)

 

[1] The summit, expected in Beijing around March 31–April 2, aims to build on a previous 2025 "truce" that eased tariffs.