With just a week remaining before President Donald Trump hosts Chinese leader Xi Jinping at the White House on September 24, the two governments are racing to finalize a tariff deal even as a separate feud over AI theft allegations and Iran-related sanctions threatens to overshadow the diplomacy. The Washington meeting, Xi’s first visit to the US capital in eleven years, will be the second Trump-Xi summit this year, following a Beijing meeting in May that produced a preliminary framework but left the toughest issues unresolved.
This isn’t the start of the current round of trade diplomacy, it’s the sequel. When Trump visited Beijing in mid-May, the two leaders announced the creation of a joint US-China Board of Trade and Board of Investment, government-to-government channels meant to negotiate tariff modifications on “non-sensitive” goods. China also committed to sizable purchases: roughly 200 Boeing aircraft, its first major order in nearly a decade, alongside pledges for billions in annual US agricultural purchases, including a push to import around 25 million tons of soybeans in 2026. In return, Washington extended more than 170 Section 301 tariff exclusions through November 10.
That framework, however, was an architecture without a finished deal. The September 24 visit, timed to coincide with the United Nations General Assembly’s high-level week, is designed to lock in and expand on those preliminary commitments, including a possible reduction of tariffs on roughly $30 billion worth of goods on each side, a target first floated in May.
Treasury Secretary Scott Bessent confirmed this week that he will meet Chinese Vice Premier He Lifeng this weekend for what officials are describing as the final round of preparatory talks before the leaders sit down. He and Bessent have now met repeatedly across 2025 and 2026 in cities including Geneva, Paris, London, and Seoul, effectively establishing a standing channel for managing the relationship.
The current round of discussions reportedly covers reducing tariffs on US energy and agricultural goods, along with lowering duties on Chinese components used by American manufacturers with some Chinese goods potentially receiving most-favored-nation treatment. Testifying before the House Financial Services Committee this week, Bessent said talks with Beijing had been productive, adding that he expected the conversation to carry into Xi’s visit itself.
Trade friction between the world’s two largest economies has simmered since 2018, but it reached a fever pitch in April 2025, when the US base tariff rate on Chinese goods hit 145 percent, and China matched it with a 125 percent reciprocal levy. As of July, the effective US tariff rate on Chinese imports stood at 22.8 percent with steel and aluminum facing rates above 40 percent. China, for its part, still applies a baseline 10 percent tariff on US goods, with steeper rates in select sectors like liquefied natural gas. US goods exports to China, meanwhile, fell more than 25 percent in 2025 to roughly $106 billion, a decline that US Trade Representative Jamieson Greer has characterized as market “diversification” rather than a rupture, though farm-state lawmakers are watching the trend nervously ahead of November’s midterms.
Total two-way trade has nonetheless kept climbing: imports and exports hit $400.8 billion between January and August this year, up 5.4 percent from the same period in 2025, though the balance remains heavily skewed toward Chinese exports.
Just over a week before the summit, the NSA, FBI, and Cybersecurity and Infrastructure Security Agency published a joint advisory accusing six Chinese AI companies: DeepSeek, Alibaba, Moonshot AI, MiniMax, StepFun, and Z.AI, of running industrial-scale “knowledge distillation” campaigns to extract proprietary capabilities from American frontier models, including versions of Claude, GPT, Gemini, and Grok, dating back to late 2024. It is widely assumed the activity was carried out “likely with Chinese government awareness” and singled out DeepSeek’s widely cited $5.6 million training cost as misleading, arguing it omits the cost of data obtained through distillation.
Bessent responded by threatening sanctions and Entity List designations for Chinese firms found to have crossed from ordinary AI research into what he called outright IP theft. Speaking to lawmakers this week, he framed the stakes in blunt terms, saying it matters a great deal whether advanced AI capability ends up in the hands of “good guys” or “bad guys.” Beijing has rejected the allegations and warned against efforts to restrict its tech sector, setting up AI as one of the more combustible items on the leaders’ agenda alongside tariffs.
Separately, tech and AI industry leaders, including OpenAI’s Sam Altman and Nvidia’s Jensen Huang, are expected in Washington for Xi’s state visit, and Trump administration officials have discussed a possible standalone meeting with them about AI’s trajectory and risks, though nothing is finalized and Xi is not expected to take part.
Bessent has also said he intends to press He Lifeng on sanctions tied to the war in Iran, as Washington escalates economic pressure on Tehran, including efforts to cut Chinese banks that facilitate Iran-linked transactions out of Western financial systems. The topic drew visible friction this week: Bessent’s congressional testimony was interrupted by anti-war protesters, several of whom were removed by security after shouting objections to US sanctions policy. Beijing’s continued purchases of Iranian oil and its broader economic ties to Tehran are expected to remain a point of contention heading into the summit.
Also looming is the scheduled November 10 expiration of a moratorium on Chinese rare-earth export controls, paired with a parallel one-year pause on US semiconductor export restrictions. Each side has accused the other of failing to fully honor the spirit of that arrangement; Washington points to China’s continued rare-earth export ban on Japan and delayed licensing for US companies, while Beijing has raised its own concerns about new US trade restrictions, including recently imposed tariffs of 10 to 12.5 percent on dozens of trading partners over forced-labor enforcement concerns, with China assigned a 12.5 percent rate.
Preparations for the Washington summit have also reportedly been logistically bumpy, echoing complaints from Chinese officials after Trump’s May visit to Beijing about disorganized planning. As of last week, briefing materials for Trump had not been finalized, and Beijing had yet to settle on which business executives, if any, would join Xi’s delegation, partly due to a dispute over the roughly 100 seats available at the White House state dinner, which Beijing had hoped to fill more than half of with CEOs.
Despite the friction, Chinese officials have reportedly voiced consistent optimism about the summit, framing their goal less around extracting specific US concessions and more around stabilizing the relationship and locking in a degree of predictability with Trump. Beijing is also said to be hopeful the visit could pave the way for Trump to attend Asia-Pacific Economic Cooperation talks in Shenzhen this November.
With midterm elections approaching, inflation pressures building, partly fueled by a seventh month of war in Iran and a global bond selloff that has pushed 10-year Treasury yields to nearly two-decade highs, and a fresh AI espionage dispute now in the mix, both leaders have strong incentives to project progress on September 24. Whether that translates into a durable agreement, or simply another extension of the truce, remains to be seen.