Trump-Xi summit: Will the two superpowers see eye to eye on tariffs, Iran, Taiwan, and AI?

United States President Donald Trump is heading to Beijing on Tuesday for what could become one of the most consequential diplomatic meetings between Washington and Beijing in recent years.

His summit with Chinese President Xi Jinping comes at a moment when relations between the world’s two largest economies are being tested simultaneously by the conflict in West Asia as well as trade disputes, tensions over Taiwan, artificial intelligence competition, rare earth supply chains and concerns over nuclear weapons.

The two-day visit, Trump’s first trip to China since 2017, is expected to feature difficult conversations across multiple fronts.

What are the sticking points between US & China ahead of Trump-Xi summit?

Iran conflict

The Iran war has become one of the most immediate and sensitive issues hanging over the summit. Since the United States and Israel launched strikes on Iran in late February, the Trump administration has repeatedly called on China to intervene diplomatically with Tehran.

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Beijing remains one of Iran’s most important economic partners and a major purchaser of Iranian crude oil, giving it influence that Washington believes could help shape Tehran’s calculations.

The White House has alternated between expressing frustration with China’s limited public involvement and acknowledging that Beijing played a role in helping prevent a complete collapse in ceasefire diplomacy last month.

According to US officials, Trump spent weeks attempting to convince the Chinese leadership to apply greater pressure on Iran to accept American conditions aimed at ending the conflict.

Washington also pushed Beijing to help secure the reopening of the Strait of Hormuz, through which roughly 20 per cent of the world’s crude oil moved before the war disrupted maritime traffic.

Despite these efforts, administration officials have indicated ahead of the visit that expectations for a major Chinese policy shift remain modest. Instead, the White House appears intent on ensuring that disagreements over Iran do not derail broader discussions with Beijing.

“We don’t want this to be something that derails the broader relationship or the agreements that might come out of our meeting in Beijing,” US Trade Representative Jamieson Greer said on Bloomberg TV last week.

Publicly, China has maintained that it wants the war to end and has continued engaging in diplomatic efforts aimed at lowering tensions. Beijing has reportedly coordinated with Pakistan in support of peace efforts and ceasefire discussions linked to the conflict.

In recent days, US Secretary of State Marco Rubio and US Treasury Secretary Scott Bessent reiterated calls for China to use its influence with Tehran, particularly concerning the Strait of Hormuz.

Rubio argued that China itself has significant economic reasons to seek a reopening of the route because of its dependence on international trade and energy imports.

“China is an export-driven economy. That means they depend on other countries to buy from them,” Rubio told reporters last week, making the case that it was in China's interest for Iran to let traffic resume.

“You can’t buy from them if you can’t ship it there, and you can’t buy from them if your economy is being destroyed by what Iran is doing,” he said.

China’s exposure to the West Asian energy market has become a major factor in the crisis. According to China’s General Administration of Customs, the country imports roughly half of its crude oil and nearly one-third of its liquefied natural gas from Middle Eastern states affected by the disruption around the strait.

Trump himself appeared to soften the tone before the trip, downplaying disagreements over Iran and suggesting that Xi also wanted maritime traffic restored.

“He’d like to see it get done,” Trump said of the Chinese leader.

Ahead of Trump’s arrival, Chinese Foreign Minister Wang Yi hosted Iranian Foreign Minister Abbas Araghchi in Beijing. During the meeting, Wang defended Iran’s right to pursue civilian nuclear development.

Xi has also delivered broader comments interpreted as criticism of Washington’s approach to the war. While not directly naming the United States, the Chinese leader stressed the importance of safeguarding international law and warned against selective application of global rules.

He also cautioned against allowing the international system to descend into “the law of the jungle.”

US officials have continued to raise concerns about China’s broader relationship with Iran. Washington has long accused Beijing of supporting Iran’s ballistic missile programme through the export of dual-use industrial materials and components that can serve military purposes.

Last month, Trump threatened to impose a new 50 per cent tariff on Chinese goods after reports emerged that Beijing was preparing to send additional air defence systems to Tehran.

He later withdrew the threat, saying Xi had provided written assurances that China would not transfer weaponry to Iran.

Days later, Trump claimed that the US Navy had intercepted a Chinese ship carrying a “gift” intended for Iran, although he did not provide further details.

Sanctions & oil trade

Even as diplomatic discussions continue, the United States has simultaneously expanded economic pressure on Chinese entities accused of supporting Iran.

Last week, the US State Department announced sanctions against four entities, including three firms based in China, for allegedly supplying sensitive satellite imagery used in Iranian military operations targeting US forces in West Asia.

The US Treasury Department also moved against Chinese oil refineries accused of purchasing Iranian crude, along with shipping companies linked to transporting the oil. The measures cut targeted companies off from the American financial system and penalise parties engaging in business with them.

China responded sharply, describing the sanctions as “illegal unilateral pressure.”

Beijing also activated a blocking statute adopted in 2021 that prevents Chinese companies from recognising or complying with foreign sanctions measures. Although the law had existed for several years, China had not previously implemented it in practice.

Trade wars & tariffs

The Chinese currency has instead strengthened steadily over the past year and recently reached a three-year high against the dollar. Analysts attribute the appreciation partly to strong export performance and partly to investor confidence that Chinese authorities are comfortable with a firmer currency environment.

China’s benchmark Shanghai Composite index is now trading at its highest level in more than a decade. Export growth has remained strong, helped by demand linked to artificial intelligence technologies and supply-chain expansion.

As of now, US tariffs on Chinese goods are exceptionally high, with reports indicating an overlapping structure of Section 301 duties and newer, escalated measures, including a 145 per cent tariff rate on certain goods early in the year, part of the severely escalated trade conflict.

These measures, which often stack, apply to a broad range of products.

But, investors appear less concerned that Washington will quickly revive sweeping tariff increases. Part of that confidence stems from legal developments in the United States.

Earlier this year, US courts struck down significant portions of Trump’s earlier tariff measures. In February, the Supreme Court ruled that the president lacked authority for many of the levies imposed on global imports, although Trump later vowed to pursue alternative legal mechanisms to restore some tariffs.

Trade data has also suggested that Chinese products continue reaching the American market indirectly through Southeast Asian countries, even amid restrictions.

The relative calm has encouraged investors to place larger bets on China’s domestic technology drive and AI self-sufficiency efforts.

Goldman Sachs analysts also argued that recent yuan (CNY) strength reflects structural trends rather than temporary summit optimism. “The summit could be a tactical catalyst for CNY strength and an important marker in stabilising trade relations,” Goldman Sachs analysts said in a note.

“(But) we think the case for a stronger CNY is more fundamental and longer-lasting beyond this week's events,” they said.

The yuan recently touched 6.79 against the dollar, its strongest level in roughly three years.

Rare earths & critical minerals

Another major focus of the summit is expected to be the future of the critical minerals agreement reached last autumn.

The deal helped ease tensions after China threatened tighter restrictions on rare earth exports — a move that alarmed American manufacturers dependent on Chinese supplies for advanced technologies and industrial production.

US officials have said both sides are expected to discuss extending the arrangement that currently allows rare earth minerals to continue flowing from China into the United States.

Although no final decision has yet been announced, one US official expressed confidence that the agreement would ultimately be prolonged. "It doesn't expire yet," the official told reporters. "I'm confident we'll announce any potential extension at the appropriate time."

Investment cooperation

According to US officials, China is expected to unveil purchases connected to Boeing aircraft, American agricultural products and energy imports.

Discussions are also underway regarding the creation of a Board of Trade and a Board of Investment aimed at facilitating commercial engagement between the two economies.

However, officials cautioned that these frameworks may require additional technical negotiations before implementation.

The expected attendance of senior American business executives at the summit has also fuelled expectations that both governments are trying to maintain economic stability despite broader strategic rivalry.

For China, avoiding a fresh deterioration in relations with the United States has become increasingly important as policymakers seek to protect economic growth and maintain export momentum.

For the Trump administration, stabilising the economic relationship could help avoid renewed market disruption during a period already marked by global uncertainty linked to the Iran conflict.

Taiwan & Russia

Even if trade discussions proceed smoothly, Taiwan is expected to remain one of the most difficult strategic issues between the two countries.

Beijing views the self-governed island as Chinese territory and has increased military activity around Taiwan in recent years. The United States, meanwhile, remains Taiwan’s most important international partner and arms supplier.

US officials previewing the summit acknowledged that Xi remains frustrated with Washington’s support for Taipei.

At the same time, American officials stressed that US policy on Taiwan would not change.

The issue has become increasingly sensitive as military manoeuvres around the Taiwan Strait have escalated and concerns over a potential future confrontation continue to shape regional security planning.

The Trump administration is also expected to raise concerns about China’s broader strategic relationships, including its ties with Russia.

“The president has spoken multiple times with General Secretary Xi Jinping about the topic of Iran and about the topic of Russia, to include the revenue that China provides to both those regimes, as well as dual-use goods, components and parts, not to mention the potential of weapons exports,” said one of the officials.

“I expect that conversation to continue.”

Artificial intelligence

While tensions remain intense, investors appear far less worried about an immediate return to the trade war conditions that rattled markets over the past two years.

Instead, many fund managers are increasingly concentrating on China’s technological ambitions, particularly in artificial intelligence and digital infrastructure.

This marks a notable change from earlier phases of the US-China confrontation, when Chinese asset prices and the yuan reacted sharply to tariff announcements and diplomatic tensions.

“The tables have turned. There's little China is eager to discuss with Trump,” Yang Tingwu, vice general manager of Tongheng Investment told Reuters, adding that Trump's unresolved war with Iran has weakened his hand.

Yang said his firm had invested in China Mobile and China Telecom to gain exposure to expanding data-centre businesses tied to artificial intelligence growth.

But, US officials said the administration is increasingly concerned about advanced Chinese AI models and the risks associated with strategic rivalry in emerging technologies.

The summit is expected to include preliminary discussions about establishing communication mechanisms focused specifically on AI-related issues.

“What that looks like is yet to be determined, but we want to take this opportunity with the leaders meeting to open up a conversation and to see if we should establish a channel of communication on AI matters,” one of the officials told Reuters.

Investors are also closely watching whether Washington may eventually relax restrictions on advanced semiconductor exports to China, although no policy changes have been announced.

Nuclear weapons

The United States has repeatedly attempted to initiate talks with China regarding nuclear arms control, but Beijing has shown little interest in formal negotiations over its arsenal.

According to a US official, Chinese authorities have privately communicated that they do not intend to participate in such discussions.

The Chinese government has said privately to the US that “they have no interest in sitting down and discussing any kind of nuclear arms control or anything along those lines at this point,” the official said.

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With inputs from agencies