Trump faces emboldened Xi in China as Iran war reduces U.S. leverage

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Both the U.S. and China want stability, despite their differences. The Chinese yuan marked its longest winning streak in nearly 11 weeks on Tuesday, a move the U.S. could take as an olive branch. China also said Monday it had dismantled a cross-border drug trafficking network with the U.S. — progress on a key issue Trump last year imposed tariffs on Beijing over.

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As he departed the White House for Beijing on Tuesday, Trump touted what he said would be a great meeting with Xi, calling their relationship a “fantastic one.” Beijing has also hailed such head-of-state diplomacy as the anchor of China-U.S. relations.

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The two sides are likely to discuss an extension of their trade truce, Chinese purchases of U.S. agricultural products and planes and follow up on fentanyl shipments. U.S. officials on Sunday told reporters the leaders would review proposals to form a board of trade, which would govern commerce in non-sensitive products, and a board of investment.

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While Trump is bringing an entourage of executives spanning major financial, technology, aerospace and agricultural firms, expectations are low for breakthroughs. That line-up includes Tesla Inc.’s Elon Musk and Nvidia Corp. CEO Jensen Huang — who was a last-minute addition.

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“Trump coming is in itself a success and will lay a foundation for Xi’s visit to the U.S. later this year,” said Wang Yiwei, a former Chinese diplomat and director of Renmin University’s Institute of International Affairs.

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For Xi, multiple Chinese analysts said the priority will be Taiwan, a democratic island the Communist Party considers its own despite never having ruled it. Xi warned Trump to proceed with care on arms sales earlier this year, after the U.S. unveiled a record US$11 billion weapons package. Officials in Beijing have in recent weeks used unorthodox ways to further isolate the island’s leader.

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“China will push for Trump to shift policy on Taiwan, including but not just the arms sale,” said Zhu Feng, executive dean of Nanjing University’s School of International Studies, adding the issue is “the most sensitive and core of China’s interests.”

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Beijing has tools to retaliate — including more sophisticated military maneuvers and sanctions — if the U.S. pushes on Taiwan, said Zhou Bo, a retired People’s Liberation Army senior colonel. Underscoring the risks to American commerce, Sanjay Mehrotra, the chief executive officer of Micron Technology Inc., is expected to travel with Trump this week — his company was hit by Chinese sanctions in 2023.

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U.S. President Donald Trump shakes hands with China’s President Xi Jinping at the Great Hall of the People in Beijing on Nov. 9, 2017 — the last time a U.S. president has visited China. Photo by Nicolas Aasfouri/AFP via Getty Images

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Trump has said he’ll discuss U.S. arms sales to Taiwan with Xi, while Secretary of State Marco Rubio — who has twice been sanctioned by China — made clear “our policy remains unchanged” on the issue. Still, some former U.S. officials expressed concern that Trump could soften Washington’s position on the island during the talks.

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It’s a pivotal moment for Trump, who has spent the past decade accusing China of taking advantage of the U.S. and vowing to get even. Now, there’s a growing sense he will have a harder time reordering the relationship, given Beijing’s increased willingness to push back.

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Xi has dusted off two dormant trade tools in the past month. First, Beijing canceled Meta Platforms Inc.’s US$2 billion acquisition of AI startup Manus, in an unprecedented use of a regulatory weapon created in 2020 by the National Development and Reform Commission. Days later, China for the first time ordered its firms to defy American sanctions against companies dealing with Iranian oil.

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Meta’s Dina Powell McCormick will be in Trump’s delegation, suggesting that saga could be part of discussions.