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US-China trade truce faces test at Trump-Xi summit

By Sohail Khan 17 September 2026, 8:33 am

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Business News›News›International›Global Trends›Trump-Xi summit: Tariffs, trade imbalance and rare earths loom over US-China talks

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Trump-Xi summit: Tariffs, trade imbalance and rare earths loom over US-China talks
Synopsis

US President Donald Trump will host Chinese President Xi Jinping next week at the White House. Tariffs, trade imbalances, and technology competition will dominate their important discussions. Both nations have lowered tariffs, but a complex system still affects imports significantly. Despite trade friction, bilateral trade has continued to grow between the two countries. This summit aims to convert a fragile trade truce into a more durable economic framework.

FILE PHOTO: U.S. President Trump visits China — US President Donald Trump will host Chinese President Xi Jinping next week at the White House. Tariffs, trade imbalances, and technology competition will dominate their important discussions.

Trade tensions between the world's two largest economies are set to take centre stage next week when US President Donald Trump hosts Chinese President Xi Jinping at the White House, with tariffs, the trade imbalance and technology competition among the key issues facing the two leaders.

A fragile truce reached last October brought an escalating tariff battle launched by Trump under control, but Washington and Beijing have yet to reach a comprehensive and lasting trade agreement.

Also read: Trump says Xi to visit Washington this month for high-stakes summit

Here is where the US-China trade relationship stands ahead of the summit, which is expected to take place on September 24.

How high are the tariffs?

Tariffs have been a major source of friction in the US-China relationship since 2018, during Trump's first term.

In April 2025, the base US tariff rate on Chinese goods surged to 145%, while China responded with reciprocal levies of 125%. Both sides have since substantially lowered their rates, although a complex patchwork of sector-specific tariffs remains.

The effective tariff rate on imports from China, which takes into account the various duties imposed across products, stood at 22.8% in July, the highest among all major US trading partners, according to the Penn Wharton Budget Model.

Steel and aluminium imports from China face some of the highest effective rates, at 40.5%, the research organisation said.

China continues to impose a 10% tariff on all US goods, with additional duties applying to specific sectors. Liquid natural gas, for instance, faces a 15% levy.

How much are the two countries still trading?

Despite the tariff battle, trade between the world's two biggest economies has continued.

Chinese customs data showed total imports and exports between the two countries reached $400.8 billion in the first eight months of this year, up 5.4% from the same period in 2025.

The trade balance, however, remains heavily tilted towards China, with Chinese exports accounting for 75% of the total.

Also Read: Trump downplays report China gave Iran intel before deadly strike on US base

Beijing's large trade surplus has long been a source of concern in Washington. A similar imbalance in China's trade with the European Union has also added to tensions between Beijing and Brussels.

What are Trump and Xi discussing?

Trump said on Sunday that he would discuss "almost everything" with Xi at the summit. Tariffs are nevertheless expected to dominate the talks.

"Tariffs, however, are 'the main issue on the agenda'," Dan Wang, a director on Eurasia Group's China team, told AFP. "Xi wouldn't go if there were no deliverables on tariffs or a trade truce," she said.

China and the United States are currently discussing a tariff reduction framework covering $30 billion worth of products on each side, China's commerce ministry said last week.

The target was agreed at Xi's previous meeting with Trump in Beijing in May. The two leaders also agreed then to establish trade and investment councils aimed at managing bilateral economic friction.

US Treasury Secretary Scott Bessent said on Tuesday that he would meet Chinese Vice Premier He Lifeng this weekend for talks expected to help prepare the ground for the White House summit.

What leverage does China have?

China's control over critical minerals, particularly rare earths, remains a key source of leverage in its dealings with Washington.

Beijing successfully pressured Washington to retreat from its sky-high tariffs last year after imposing stringent restrictions on rare-earth exports. The minerals are critical to a range of high-tech products, while China dominates their processing.

"China still has the upper hand" going into next week's talks, Wang of Eurasia Group said.

She said China's supply chains are "very flexible" and that its long-running export boom has so far not been significantly undermined by US tariffs.

Xi has also recently strengthened China's diplomatic profile, meeting several leaders including Russian President Vladimir Putin and Indian Prime Minister Narendra Modi. He has also traveled to Bishkek, Cairo and New Delhi this month.

What does Trump want?

The Trump administration is seeking to ease economic concerns ahead of the crucial US midterm elections in November, particularly as global oil prices have risen following renewed fighting in the US war with Iran.

A recurring US objective in trade negotiations with Beijing has been securing Chinese commitments to buy more American agricultural products, particularly soybeans.

The summit also provides Trump with an opportunity to host a major diplomatic engagement at the White House. It would mark Xi's first visit to Washington in 11 years.

What could derail a deal?

Tariffs are not the only source of tension between Washington and Beijing, and several other disputes could complicate efforts to reach a broader agreement.

China's economic and diplomatic support for Iran is one potential flashpoint. Recent Wall Street Journal reports claimed that Chinese entities had supplied Tehran with satellite imagery of a military base in Jordan housing US troops.

Technology competition is another major area of friction, particularly as the two countries compete for an edge in artificial intelligence.

The US government last week accused Chinese AI laboratories of stealing the capabilities of US companies on an "industrial scale".

With tariffs, trade imbalances, critical minerals and technology all in play, the Trump-Xi meeting will test whether the fragile US-China trade truce can be converted into a broader and more durable framework for managing their economic relationship.

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