In April 2025, U.S. tariffs on Chinese goods peaked at 145 percent. Nine months later, President Trump and Chinese President Xi Jinping describe their relationship as 'extremely good' and are planning four bilateral summits in 2026, including Trump's first visit to Beijing since 2017.
The February 5, 2026 phone call between Trump and Xi confirms an April presidential visit to Beijing and signals a diplomatic engagement phase following a year of extreme tariff escalation, a temporary trade truce in Busan, and ongoing friction over Taiwan arms sales. The relationship has stabilized around managed competition rather than resolution—both sides have suspended their most aggressive trade measures through November 2026, but structural disagreements over technology, Taiwan, and industrial policy remain intact.
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People Involved
Donald Trump
President of the United States (In office, second term)
Xi Jinping
President of the People's Republic of China (General Secretary of the Chinese Communist Party since 2012)
Scott Bessent
U.S. Treasury Secretary (Lead U.S. negotiator on China trade)
He Lifeng
Vice Premier of China (China's lead economic negotiator)
Organizations Involved
U.
U.S. Department of the Treasury
Federal Agency
Status: Lead agency on China trade negotiations
The Treasury Department has taken the lead role in negotiating tariff agreements with China, with Secretary Bessent serving as Trump's primary envoy.
CH
China Ministry of Commerce
Government Ministry
Status: Administers Chinese trade policy and export controls
Implements China's tariff retaliations and export controls on rare earth materials as leverage in trade negotiations.
Timeline
Trump-Xi Phone Call Confirms April Summit
Diplomatic
Trump and Xi speak by phone, describing the bilateral relationship as 'extremely good' and confirming Trump's April Beijing visit.
China Conducts Largest Taiwan Military Drills
Military
Chinese military launches expansive exercises around Taiwan simulating blockade operations in response to U.S. arms sales.
China Sanctions 30 U.S. Defense Firms
Diplomatic
China sanctions Boeing, Northrop Grumman, L3Harris, and others over Taiwan arms sales, freezing assets and barring domestic cooperation.
Record $11.1 Billion Taiwan Arms Sale Announced
Military
U.S. announces largest-ever arms package for Taiwan, including HIMARS, ATACMS missiles, and howitzers.
Trump Accepts Beijing Visit Invitation
Diplomatic
Trump announces he will visit China in April 2026 and will host Xi for a state visit later in the year.
Trade Truce Takes Effect
Trade
One-year tariff suspension begins; China suspends retaliatory tariffs and October rare earth controls; U.S. reduces fentanyl tariff to 10%.
Busan Summit: One-Year Trade Truce
Diplomatic
Trump and Xi meet in South Korea for nearly two hours, agreeing to a one-year tariff suspension through November 2026 and Chinese soybean purchases.
China Expands Rare Earth Export Controls
Trade
China announces sweeping new export controls on rare earths, lithium batteries, and superhard materials, adding five more elements.
Tariff Pause Extended 90 Days
Trade
Both parties extend the tariff reduction for another 90 days as negotiations continue.
First Tariff Pause Agreed in Switzerland
Diplomatic
Bessent and Chinese officials agree to 90-day tariff reduction, lowering rates to 30% on both sides.
Tariffs Peak at 145% vs. 125%
Trade
U.S. raises tariffs to 145%; China responds with 125% tariffs on American goods—the highest rates of the trade war.
U.S. Tariffs Reach 104%
Trade
Trump raises tariffs by additional 50%, bringing the baseline rate on Chinese imports to 104%.
China Retaliates with Rare Earth Controls
Trade
China's Ministry of Commerce introduces export restrictions on seven rare earth elements in response to U.S. tariffs.
Liberation Day Tariffs Add 34%
Trade
U.S. imposes additional 34% duty on Chinese imports as part of 'Liberation Day' tariffs, stacking on top of existing measures.
Fentanyl Emergency Tariffs Imposed
Trade
Trump signs Executive Order 14195 declaring a national emergency over fentanyl trafficking, imposing 20% tariffs on Chinese imports.
Trump Inaugurated, Trade War Preparations Begin
Political
Trump begins second term with plans to escalate tariffs on China as a central economic policy.
Scenarios
1
Trade Truce Extended, Competition Continues
Discussed by: Brookings Institution, Council on Foreign Relations, Atlantic Council analysts
The most likely near-term path. Both sides extend the tariff suspension beyond November 2026, possibly with modest additional concessions on agricultural purchases or technology licensing. The relationship stabilizes around 'managed competition'—cooperative enough to avoid economic rupture, adversarial enough that neither side makes structural concessions on technology policy, industrial subsidies, or Taiwan. Multiple summits create optics of progress without resolving underlying disputes.
If U.S. inflation remains elevated or employment softens ahead of November 2026 midterms, Trump could return to blaming China as a political strategy—a playbook he has used in previous election cycles. China hawks in Congress could push legislative hardening regardless of White House tone. A renewed tariff spiral would follow, potentially returning to 100%+ rates and prompting China to reimpose rare earth export controls.
3
Taiwan Crisis Derails Diplomacy
Discussed by: American Enterprise Institute, CSIS, South China Morning Post analysts
A Taiwan flashpoint—whether triggered by additional U.S. arms sales, a political development in Taipei, or Chinese military action—could rapidly collapse the diplomatic track. Xi's emphasis in the February call that Taiwan is 'the most important issue' signals Beijing's red line. A serious incident could make summits politically untenable for either leader and reverse the engagement trajectory entirely.
4
Comprehensive Trade Agreement Reached
Discussed by: White House officials, some business community optimists
Trump and Xi use the planned summits to negotiate a broader agreement addressing technology transfer, market access, and industrial subsidies. This would require structural concessions neither side has shown willingness to make—China on state enterprise subsidies and intellectual property enforcement, the U.S. on technology export restrictions. Analysts view this as unlikely given that the Busan framework was explicitly a 'shallow truce' rather than a breakthrough.
Historical Context
Nixon's China Opening (1972)
February 1972
What Happened
President Richard Nixon traveled to Beijing for the first U.S. presidential visit to communist China, meeting Chairman Mao Zedong and Premier Zhou Enlai. The trip followed two years of secret diplomacy by Henry Kissinger and produced the Shanghai Communiqué, in which both nations agreed to work toward normalized relations while acknowledging their differences over Taiwan.
Outcome
Short Term
The visit ended 25 years of diplomatic isolation between the two countries and began a gradual normalization process.
Long Term
Full diplomatic relations were established in 1979. The framework lasted until the current strategic competition era—roughly 50 years of engagement-focused policy.
Why It's Relevant Today
Trump's planned April 2026 Beijing visit carries echoes of Nixon's opening: a Republican president using personal diplomacy to reshape the U.S.-China relationship. But where Nixon sought rapprochement, Trump oscillates between confrontation and engagement. The Taiwan question that Nixon carefully sidestepped remains the central unresolved issue.
Trump-Xi G20 Osaka Truce (2019)
June 2019
What Happened
At the G20 summit in Osaka, Trump and Xi met for 80 minutes and agreed to pause tariff escalation. Trump described the outcome as 'better than expected.' The U.S. suspended planned tariff increases and signaled it would ease restrictions on Huawei. Both sides agreed to resume trade negotiations.
Outcome
Short Term
The truce produced six months of negotiations leading to the Phase One trade deal in December 2019.
Long Term
The Phase One deal was only partially implemented before COVID-19 disrupted trade flows. China never met its purchasing commitments. The pattern—summit truce, partial agreement, incomplete implementation—established the template for subsequent negotiations.
Why It's Relevant Today
The Busan summit in October 2025 closely mirrors Osaka: a bilateral meeting producing a tariff pause, agricultural purchase commitments, and agreement to continue talking. Observers note the 2025 truce is similarly 'shallow' and question whether implementation will fare better than the Phase One agreement.
Smoot-Hawley Tariff Act (1930)
June 1930
What Happened
The U.S. Congress passed tariffs on over 20,000 imported goods, raising average rates to nearly 50%. More than 1,000 economists signed a letter urging President Hoover to veto the bill. Major trading partners retaliated with their own tariffs.
Outcome
Short Term
U.S. imports declined 66% and exports 61% between 1929 and 1934.
Long Term
The tariff war is widely credited with deepening and prolonging the Great Depression. It led to the 1934 Reciprocal Trade Agreements Act and ultimately the post-WWII multilateral trade system.
Why It's Relevant Today
Trade economists have drawn parallels to Smoot-Hawley when analyzing the 2025 tariff escalation. The U.S.-China rates of 145% and 125% exceeded Smoot-Hawley levels. While the truce has paused the worst effects, the episode demonstrates how quickly protectionist spirals can escalate.
