Trump’s China Visit Will Likely Extend Trade Truce, While Points Of Friction Remain

President Donald Trump led a formal state visit to China from May 13-15, the first such presidential visit since 2017. The US delegation included U.S. Trade Representative Jamieson Greer, Secretary of the Treasury Scott Bessent, Secretary of State Marco Rubio, Secretary of War Pete Hegseth, and a group of US CEOs.

During their talks, the two leaders agreed both the United States and China should pursue a “constructive relationship of strategic stability.” In light of this backdrop, of note are the following developments that resulted from the meeting:

• Tariffs: While the White House Fact Sheet does not contemplate immediate tariff commitments, it does mention the creation of a U.S.-China Board of Trade (more below). A Chinese Ministry of Commerce (“MOFCOM”) Press Release indicates that US tariffs on Chinese goods will remain at or below the level set under the US-China trade truce from last November, embodied in the “Kuala Lumpur joint arrangement.” Specifically, the US commitment on tariff levels shall stand “regardless of what reason is invoked to impose or substitute tariffs on China” (emphasis added). As such, as the Office of the U.S. Trade Representative (“USTR”) begins its rollout of new Section 301 tariffs to respond to alleged failures by certain economies, including China, to address forced labor and excess manufacturing capacity, both the Kuala Lumpur joint agreement and the recent talks in China suggest the cumulative tariff rates on Chinese goods might not exceed the IEEPA-era rates from last November to this February.
• US-China Board of Trade & Board of Investment: The two countries agreed to establish the two inter-governmental forums to “optimize the bilateral economic relationship.” The Board of Investment will provide a venue to discuss investment-related matters. Per MOFCOM, the Board of Trade will explore reciprocal tariff reductions on products (specifically “non-sensitive goods,” according to the White House) worth $30 billion or more on each side. On June 5, USTR requested public comments on “the types of non-sensitive products that would benefit from favorable tariff modifications by both sides,” as well as the design of the Board of Trade itself.
• Export Controls: The White House Fact Sheet summarizing the May visit states that China will “address US concerns regarding supply chain shortages related to rare earths and other critical minerals, including yttrium, scandium, neodymium, and indium. China will also address US concerns regarding prohibitions or restrictions on the sale of rare earth production and processing equipment and technologies.” As for US export controls on China, neither side made any mention of this issue in their respective readouts, and U.S. Trade Representative Greer later said the two sides did not discuss export controls on semiconductor chips, a key concern for both countries. Reuters reported on June 16 that the U.S. Department of Commerce has delayed adding more than 100 Chinese companies to the BIS Entity List, which restricts US exports to such entities.
• Purchases: China committed to purchase 200 Boeing aircraft, as well as $17 billion per year of US agricultural products from 2026 to 2028. Both sides also agreed on other items related to market access for agricultural products.

Looking ahead, this trip might be the first of four meetings between Presidents Trump and Xi this year. President Trump invited President Xi Jinping to visit Washington DC in September. The two leaders will also likely meet again at the APEC Leaders’ Meeting in November and the G20 Leaders’ Summit in December. As such, the two countries could announce more deals and agreements in the coming months. Absent significant deterioration in the bilateral relationship, and apart from the United States’ forthcoming Section 301 tariffs on a multitude of economies for reasons of forced labor and manufactured excess capacity, we do not expect either side to take major tariff actions against the other. 

That said, points of friction remain. The Pentagon updated the long-anticipated Section 1260H “Chinese military companies” list on June 8. New additions include major Chinese technology companies, electric vehicle companies, solar manufacturers, and biotech companies. Even though the 1260H has serious legal and practical effects, such as those related to government procurement, lobbying activities, and goodwill, the list is generally considered much less severe than some other US sanction lists, such as the Specially Designated Nationals and Blocked Persons List. As such, China’s apparent retaliation was similarly measured. On June 22, MOFCOM added 10 US defense companies to China’s export control list, and on the same day, China’s Ministry of Finance published a list of US companies (mostly defense companies) from which government entities are prohibited from buying products.

There are other points of future potential friction. Congress, for example, is poised to consider a slate of tough-on-China bills this year (see, e.g., the MATCH Act), and China’s continued restrictions on rare-earth exports to Japan might ripple through the US supply chain. As discussed in other articles in this month’s newsletter, China’s three recently published regulations on countering foreign trade restrictions could create compliance conflicts for multinational companies and increase tensions between China and foreign governments.

As the two countries aim to enter an era of “strategic stability,” there are reasons for cautious optimism about the general stability of the bilateral trade and economic relationship. However, as noted above, multiple points of friction remain and ad hoc events, such as the 2026 update to the 1260H, may lead to either side adopting measures having broadly applicable or industry-specific effects critical to individual businesses. In addition, the conflict-of-laws issue will likely become even more serious and prominent for multinational companies, as the competitive aspects of the bilateral relationship are unlikely to change and may actually intensify, especially as to “strategic” industries/sectors. Thus, interested parties should continue to closely monitor developments between the two countries and any subsequent regulatory or statutory changes affecting US-China trade.