SUMMARY: Washington and Beijing will now start substantive planning for Trump’s visit to China in April. Expect Chinese commitments to purchase US goods rather than a “grand bargain” that tries to tackle core issues in the relationship. 2026 is a period of momentary stability for the US-China relationship, but one that is driven by mutual convenience and is highly transactional.
President Trump spoke today with Chinese leader Xi Jinping, their first call since late November 2025. The readouts from each side were positive. Trump’s Truth Social post (also accessible via X HERE) suggests a broad range of topics including bilateral trade, Taiwan, and foreign policy issues including Iran and Russia/Ukraine.
The main backdrop for this call is Trump’s state visit to China in April, which both sides agreed to at their meeting in late October 2025 in South Korea. The two sides have thus far engaged in little joint planning for the visit. Trump’s reference to potential deliverables – his post mentions Chinese purchases of oil and gas, agricultural products such as soybeans, aircraft engines – will kick off substantive discussions in the weeks ahead.
As we noted in our China geopolitical outlook for 2026 (link HERE), we expect Chinese purchase commitments to be the main set of deliverables for the visit. Trump has few ambitions to push for changes to Chinese economic policies, and Xi – confident in his ability to withstand US pressure – is of no mind to negotiate them. The US-China relationship in 2026 is one of short-term stability that is mutually convenient for both sides (for now) and highly transactional.
Trump has apparently not decided whether to bring US business leaders on the visit, as UK Prime Minister Keir Starmer did in his own China visit last week, and if so, which leaders. While this is worth watching, deals struck between US and Chinese companies during the visit will be ones that were already in the planning.
Trump’s post did not mention sales of advanced semiconductors to China, and we doubt that this will be a major focus of planning. Trump has already approved in principle the sale of Nvidia’s H200 chips in China, though US agencies are still completing security reviews (the Financial Times has a useful update HERE). We expect Beijing to allow major Chinese tech companies to place significant orders of Nvidia and AMD chips, so long as they are also committed to working with and developing the domestic chip industry in parallel.
Beijing does not have major asks from the United States, as it is content to step up purchases of needed US products in exchange for a window of stability, which China will use to pursue the industrial modernization and tech self-reliance goals featured in the Five-Year Plan to be released in March. One interesting watchpoint will be whether Trump’s visit includes discussion of increasing Chinese direct investment in the United States. Trump has at times expressed openness to this idea – even in the auto sector – but Chinese officials and firms will want assurances that the US political and regulatory environment will be safe for these investments.
While Trump’s visit will likely be smooth, we are monitoring the Supreme Court’s pending ruling in IEEPA tariffs as a wildcard. Trump could potentially replace IEEPA tariffs on imports from China with tariffs under other authorities, including an existing Section 301 investigation from his first term. That could potentially upset the current US-China understanding on tariffs, but we doubt that Trump will do anything provocative. All his actions since October point to a desire to maintain the current truce, in which soybeans are flowing from the US to China and critical minerals are flowing from China to the US (even as the administration ramps up its efforts to develop alternatives to Chinese supply chains).
We are more worried about US-China re-escalation in 2027, post-US midterm elections, than in 2026. In the meantime, the current period of stability has lowered Beijing’s sense of urgency in boosting growth, reinforcing our subdued outlook for growth this year (see more HERE).
Taiwan, as always, remains the most sensitive issue in the relationship, with Xi’s readout offering the typical warning for the US to tread carefully on arms sales to Taiwan. We continue to think that the near-term risks of crisis over Taiwan are very low, for reasons explained in our geopolitical outlook.
