Trump, Xi seek trade deals, but AI, tariffs and Iran loom large

President Donald Trump and Chinese leader Xi Jinping‘s aims of bolstering trade stability and clinching economic wins could be scrambled by a roiling debate over artificial intelligence, as well as shifting U.S. tariffs and an Iran war-related sanctions operation.

The two leaders are expected to seek ways to strengthen their fragile trade truce when they meet in Washington for their second face-to-face summit this year.

Despite gestures of goodwill surrounding the lead-up to the summit, the two sides continue to lob accusations and launch retaliatory trade actions.

Treasury Secretary Scott Bessent, in an interview with CNBC’s “Squawk Box” on Monday, said the “great respect” Trump and Xi have for each other trickles down to broader U.S.-China negotiations.

He then noted, “We had some deliverables that have not been completely fulfilled” by China as part of a trade agreement Trump and Xi reached in Busan, South Korea, nearly a year ago.

Some China analysts have raised concerns about the unusually top-down diplomatic arrangement between the two economic superpowers.

“A number of inconsistent viewpoints seem to be jostling each other,” as Trump dictates “the overarching approach” toward China “while letting more negative actions occur at the margins,” said Claire Reade, a senior associate with the Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies.

The summit comes with less than six weeks left in a U.S. election cycle that has largely centered on Americans’ cost of living concerns. Trump, whose polling marks on that key issue have sunk to new lows, has even more of an incentive to emerge from the summit with Xi touting some form of economic deal.

Here’s where the U.S.-China trade relationship stands and what’s at risk when Trump and Xi meet:

Last year’s explosive trade war saw the two economic superpowers hike tariffs on each other’s goods to dizzying heights: U.S. levies on Chinese imports hit 145% at the peak of the squabble, while Beijing’s retaliatory duties reached 125%.

Those tariffs were slashed in May 2025 after trade negotiators in Switzerland struck a temporary deal, which was extended in mid-August. Trump and Xi then made an agreement in Busan that led the countries to further scale back their tit-for-tat trade measures.

As part of that deal, China agreed to suspend export controls on rare earths and buy U.S. agricultural products, while the U.S. reduced some tariffs and suspended other trade retaliation. That deal was set to last for one year, and will expire Nov. 10, a week after the U.S. election, absent an extension.

Despite the cooldown, both countries continue to impose high tariffs on each other’s goods, multiple analyses show. As of July, the effective tariff rate of 22.8% on Chinese products is the highest among major U.S….