From tariff war to truce: The commercial stakes of the Beijing summit
William Klein, Consulting Partner, Berlin
During their May 14–15 meetings in Beijing, Presidents Trump and Xi will address the full range of tensions that define their relationship – from Taiwan to the shadow the Iran war is casting over the world. But the commercial stakes of this summit are equally consequential. Last year's tariff and export control measures demonstrated that each side can inflict economic harm on the other at an acceptable cost. That shared vulnerability brought them to Busan, South Korea in October, where the United States pledged to refrain from further tariff hikes while China committed to issuing export licenses for critical minerals.
That truce has held. Both sides are signaling an intention to reinforce it this week by reaffirming their Busan commitments, and perhaps by announcing commercial deals and institutionalizing a high-level dialogue on trade and investment. Yet distrust and competition continue to shape the relationship. Since Busan, the U.S. has tightened export controls and expanded sanctions, while China has responded with new regulations designed to push back against U.S. pressure and, for the first time, ordered its banks and companies to defy U.S. sanctions directly.
For companies that view both markets as indispensable, the central question is how to manage these conflicting signals. Will the truce translate into durable stability? Or must companies prepare for surface-level calm masking intensifying decoupling below?
In this report, our experts advising clients on U.S.–China relations offer their views on whether Washington and Beijing will go beyond Busan – narrowing their gulf of distrust and delivering the stability that globally operating companies need as they plan their future.
The answer also matters far beyond the two capitals. As the world's two largest and most innovative economies, the choices the U.S. and China make this week reverberate globally – a reality reflected in the perspectives of our colleagues from around the world, who each assess what the summit means for their region.
U.S. market access in China: What companies can expect from the summit
Ginny Wilmerding, Partner, New York
Several American CEOs are expected to accompany President Trump to Beijing, a signal that business access and commercial fairness will be part of the agenda. The question is how much weight the administration will attach to the specific challenges U.S. companies face in China and how hard it will push on their behalf. This summit is unlikely to resolve those concerns, but top-level engagement matters, and the presence of American business leaders alongside the President is itself a form of advocacy.
The challenges facing U.S. companies in China run deeper than any single summit can address. Beijing's sweeping new regulations penalizing foreign companies that stop using Chinese suppliers are a direct counter to U.S. de-risking pressure. Firms like Apple, which announced hundreds of billions in U.S. investment while still relying on its Chinese supply chain, are caught between two governments pulling in opposite directions. The picture is no better for cross-border M&A, which appears stalled in both directions. China's National Development and Reform Commission has blocked Meta's acquisition of Chinese AI startup Manus, requiring the parties to unwind the deal – mirroring the CFIUS process the U.S. uses to block Chinese acquisitions on national security grounds. U.S. financial institutions are navigating both sides, with JPMorgan, for example, taking an overweight position on China in early 2026 while committing $1.5 trillion to boost domestic U.S. sectors including critical minerals, pharmaceutical precursors, and robotics. While U.S. fashion and cosmetics brands are eyeing the world's fastest-growing consumer market, rising nationalism and the emergence of high-quality domestic brands are pushing Chinese consumers toward local competitors.
CEOs who make the trip to Beijing, whether with the President or independently, send a signal that cannot be delegated. Even a modestly successful summit will make that engagement easier and more productive.
Chinese companies in the U.S.: Investment restrictions, tariffs, and the limits of a truce
Brett O'Brien, Partner, Washington DC
Confronting a sluggish domestic market that cannot support their growth objectives, many Chinese companies have awaited the summit hoping it will re-open the American market to their exports and capital. President Trump gave them reason to be hopeful, stating earlier this year that he will encourage new Chinese investments in the U.S., including in the increasingly protected auto sector.
Yet recent developments suggest the prospect for renewed commercial dynamism may not be so auspicious. Members of Congress have vocally pushed back against any commercial accommodations. Dozens of Representatives and Senators have insisted that President Trump provide no opening for Chinese auto manufacturers to enter the U.S. market. Others have advanced legislation to block the sale of high-end semiconductors, cloud capacity, and other technology that would strengthen China's global competitiveness. Led largely by congressional Republicans, these opposing initiatives have been joined by Democrats looking to burnish their own hawkish credentials or isolate Trump.
Beyond Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer – Trump's principal negotiators with China – many U.S. agency heads are complicating the path to a productive outcome. Threats by the Departments of Commerce and Defense to blacklist major Chinese corporations, along with recent sanctions against China's Hengli Group, one of the world's largest refiners of petrochemical products, have dampened expectations and portend tough times ahead. The Hengli actions have already prompted countermeasures by Beijing against those who comply with them, placing Chinese and U.S. companies alike in an uncomfortable, if not untenable, position. Some view the prospective establishment of a bilateral "Board of Trade" as a constructive forum to address these challenges, while others fear it may serve to kick disagreements down the diplomatic road.
China's commercial priorities: Stability at home, sovereignty in strategic sectors
Paul Yang, Partner, Hong Kong
China has demonstrated strong resilience amid growing global economic volatility, and domestic consumer and corporate sentiment has improved markedly since the start of 2026. Structural challenges remain, however, as China shifts its economic model from volume-driven, low-cost manufacturing toward productivity gains, technological self-sufficiency, and higher-value industries.
Beijing has identified three domestic stabilization priorities – foreign trade, foreign investment, and employment – which signal a willingness to offer the U.S. tangible "trade wins" in sectors of low strategic sensitivity, in exchange for relief on tariffs and technology containment measures. China, however, is unlikely to retreat from its commitment to self-reliance and supply chain security, particularly in strategic and high-tech sectors where it is actively building technological sovereignty. Rare earth export controls will remain in place as both policy instrument and negotiating leverage, though their implementation could be quietly eased at the margins as a tactical concession.
Both sides have a clear strategic interest in a more stable and predictable economic relationship. U.S. aviation and agricultural companies are the most likely near-term beneficiaries. The open questions are how far agreement can extend into non-sensitive sectors, and the scale of any Chinese commitment to purchase U.S. energy. Whatever the outcome, Beijing will frame any deal as a win-win between two equal powers – a framing that serves its domestic narrative and reinforces the recovery in sentiment already underway.
Tariffs: Shaping the landscape forward
Sarah Trister, Managing Director, Washington DC, and Rachel Alexander, Managing Director, Washington DC
Despite the intense rhetoric of the past year, the U.S. posture going into the summit is focused on maintaining stability while pursuing an upper hand in negotiations. Treasury Secretary Bessent has signaled a strategy of selective decoupling – gaining independence from China in critical minerals, medicines, and semiconductors while maintaining a broader trade relationship. The February Supreme Court decision overturning Trump's national emergency tariffs, and the subsequent decision by the US Court of International Trade ruling his Section 122 across the board 10% tariff illegal, posed a temporary setback to the president’s trade agenda. Now, the administration seeks to reimpose tariffs through other mechanisms. The multitude of ongoing U.S. trade investigations – both sectoral national security reviews and unfair trade practices – add layers of complexity into the future of U.S. tariff policies with respect to China. That complexity ensures tariffs will remain a significant point of friction.
The U.S. has proposed the U.S.–China Board of Trade, meant to provide an avenue for government-to-government discussions on trade in non-sensitive goods, with U.S. access to China's agricultural market among the expected agenda items. U.S. agricultural interests have warned the U.S. Trade Representative not to let the current Section 301 investigation into Chinese forced labor derail the upcoming talks, while also seeking additional purchasing commitments and the removal of retaliatory tariffs on U.S. soybeans. Skepticism runs higher in other industries – 70 House Democrats sent a letter to President Trump opposing Chinese automakers entering the U.S. market, while steel groups have raised similar concerns.
China is focused on stability but is expected to raise ongoing concerns about U.S. export controls on semiconductors and the 301 investigations. China criticized the recent House Foreign Affairs Committee markup of export control bills, though Congress is likely to continue pressuring the administration to maintain stricter restrictions on the export of American technology that could boost China's AI and military sectors. China will also likely press for the removal of Chinese firms from American entity lists and a reduction in restrictions on Chinese investments in the United States. While pressing for stability, China has demonstrated it is not afraid to flex its extraterritorial muscles, as the recent Manus decision shows.
Technology and critical minerals: Structural tensions will outlast any summit agreement
Doug Bove, Managing Director, Washington DC
The summit may produce targeted concessions in technology and critical minerals, but changes to the structural architecture underneath are not on the table.
On semiconductors, the executive branch has treated export controls as a diplomatic instrument, using licensing and carve-outs as negotiating tools. Congress has not. Legislation to tighten controls on advanced chips, chip-making equipment, and design software has broad bipartisan support, and any summit commitment to ease restrictions faces immediate congressional resistance.
On AI, the summit's proposed communications channel is unlikely to bridge the core divide: Washington wants to talk about model safety, Beijing wants assurances about offensive use, and neither side has agreed to address the other's concern. With no enforcement mechanism for model theft and Chinese labs still running distillation campaigns against U.S. frontier models, the channel is more confidence-building gesture than structural fix.
On critical minerals, the more important point is what a concession cannot fix. China controls an estimated 85–90% of global rare earth refining capacity, and experts assess it could take a decade to develop alternative midstream capacity at scale. Any near-term concession on rare earth export enforcement is a tactical gesture, not a structural one. The same holds true for the Bureau of Industry and Security's affiliate ownership rule that triggered an October 2025 standoff; the rule's language in the federal register automatically reimplements it in November 2026, "extending indefinitely," with no further regulatory action required. It is unlikely to be given away in any post-summit communiqué – even if the suspension period is further extended.
China's supply chain security regulation, issued in early April with no transition period, is the least-discussed but most consequential development for multinational supply chain strategy. It grants Chinese authorities broad power to investigate and penalize any foreign company deemed to harm China's industrial and supply chain security. A company simply diversifying sourcing away from a Chinese supplier may simultaneously be in violation of Chinese law. Penalties include import and export prohibitions and exit bans on individual employees. While corporate leaders have focused on tariffs and chip controls, it is this regulation that makes routine de-risking a personal legal liability.
Iran's long shadow over the summit
Iesha Carter, Senior Associate, Washington DC
The Iran conflict has already shaped the summit, forcing a two-month delay that has unsettled energy markets and left both sides economically exposed before the talks began. Now, as the leaders convene in Beijing, the war's commercial consequences will be present throughout. China is facing its steepest domestic energy price increases on record. The U.S., despite being a net oil exporter, has seen gas prices rise, revealing its own vulnerability to global energy disruption. Shared pressure may make energy markets a quiet pillar of the talks, but stabilization is more likely through parallel restraint than direct coordination. China remains committed to securing discounted oil through sanctioned channels while the U.S. remains determined to constrain those flows. This divergence will continue to impede market stabilization, leaving companies in energy, shipping, and industrials exposed to continued volatility even if leaders signal calm.
The conflict has also reshuffled leverage. With Washington's post-Maduro energy deal redirecting Venezuelan crude toward the West and away from Chinese buyers, China's dependence on Middle East energy flows has increased. U.S. sanctions on China's purchases of Iranian oil squeeze that dependence further, surfacing a pressure point Washington did not have before. With leverage running in both directions, businesses should expect a hardened U.S. position on sanctions compliance alongside narrowing space for broader commercial agreements on critical minerals, tariffs, and market access.
Beyond Washington and Beijing: How the rest of the world views the summit
The Trump–Xi summit is not a bilateral event in its consequences. From Europe to Asia, Latin America to Africa, our colleagues on the ground share their assessment of what Washington and Beijing decide this week – and what it means for the companies and governments they advise.
Andrew Yeo, Partner, Singapore
Southeast Asia views the summit not as a reset but as an attempt to contain a relationship in structural decline. The region's central concern is whether both powers can prevent competition from tipping into economic and security instability, particularly for Indonesia, Vietnam, Malaysia, and Thailand as they position themselves as alternative manufacturing and investment hubs amid supply-chain diversification. While greater U.S.–China stability could bolster investor confidence, the summit may entrench a more transactional, bloc-oriented regional order that increasingly compels Southeast Asian governments and businesses to navigate difficult trade-offs between Washington and Beijing.
Colin Thompson, Consultant, Tokyo
For Japan, the summit is a test of commitments secured during Prime Minister Takaichi's March visit to the White House: reaffirmation of the U.S.–Japan alliance and deeper cooperation on economic security and Taiwan Strait stability. Japanese companies will read commercial outcomes through that lens. Automakers and battery producers will watch tariffs and EV rules; chip and equipment firms will track export controls. Together, those signals will shape decisions on where to site plants and fabrication facilities, how much capacity to allocate to China versus the U.S., and which mineral and component supply arrangements remain viable over the long term.
Sophie McNulty, Partner, Dubai
Middle Eastern countries have spent a decade actively diversifying their economies, so we will be watching closely for signals on industrial cooperation and where strategic red lines fall for key growth sectors. Energy, critical minerals, and advanced technology – sectors where the Middle East holds structural advantages – will be of particular interest. Gulf entities need a clear-eyed assessment of geopolitical risk to make investment decisions that hold across multiple scenarios. How Washington and Beijing define the boundaries of their competition in these sectors will directly shape where Gulf investors deploy capital.
Raenette Taljaard, Senior Advisor, Cape Town
African states will be looking for clarity on a U.S.–China modus vivendi that addresses concerns about great power rivalry on a continent prioritizing growth, development, and its demographic dividend. They will be watching whether the summit amounts to anything more than a reset of the competition for Africa's critical minerals, or whether it opens broader questions about the continent's place in a reordered global system. More immediately, inflation and food price pressures from the Iran war are adding macroeconomic complexity, with leaders and companies watching for signs that both sides intend to end it.
Europe's China policy is driven less by what China is – a geopolitical rival – than by what China does: distorting markets and supporting Russia in Ukraine. Recent EU interventions have centered on record tariff use to address unfair competition. With the EU–U.S. relationship more adversarial than ever, senior European leaders have made their own trips to Beijing, announcing narrow agreements on visas and economic cooperation while failing to limit Chinese support for Moscow. Expectations are low that the summit will ease Europe's strategic isolation – leaving continued uncertainty for firms and investors.
Some in the U.K. will view the summit as "out with the old, in with the new," as warming U.K.–China relations contrast with a fraying U.S. partnership. Even before Anglo-U.S. tensions mounted over Iran, Prime Minister Starmer hedged his bets with a January visit to Beijing. Economic fruits were minimal, but the U.K. hopes the summit blurs sharp lines between the two rivals, expanding its strategic freedom. Given the disproportionately negative impact of the Iran energy shock on the U.K. economy, London will also be watching for signs that Xi can help move Trump toward an early resolution.
José Parra, Partner, Miami
Latin America presents a telling paradox: while several governments are politically aligned with the Trump administration, their economies remain deeply tied to China. Brazil's trade with China dwarfs that with the United States, and Brasilia has leveraged that in disputes with Washington. Meanwhile, President Milei of Argentina has recently renewed a key financial agreement with China atop its already heavy investment in the country’s largest hydropower project. Companies with interests in the region should examine the summit's signals closely – even implicit shifts in U.S.–China commercial relations could have significant consequences for the trillions in investments at stake across Latin America.
Phil Harwood, Partner, Toronto
Canada recently moved to reset trade relations with China to reduce over-reliance on the U.S. Now, Canadian companies will watch the summit for signals on which sectors are open for business between the world's two largest economies, and which will be battlegrounds for national and economic security. Energy and critical minerals will be of particular interest given Canada's strength in both. Canadian companies must be clear-eyed in assessing geopolitical risks to make investment decisions with confidence.
