US-China Business Relations Improve Amidst Tariffs and Data Security Concerns

Hi, this is Evelyn, writing to you from Beijing. Welcome to the latest edition of The China Connection — a succinct snapshot of what I'm seeing and hearing from local businesses.

Now that the Trump-Xi summit has helped keep tariffs in check, Chinese companies and U.S. representatives alike are making the most of an extended truce to get some deals going. But is that enough to overcome data security and branding hurdles?

The big story

For businesses navigating U.S.-China tensions, "the worst is over," Zou Ping, co-founder of AI Speech, told me in Suzhou last week.

It was just a few days after he'd returned from the U.S., one of the company's key growth markets as it pushes sales of high-end microphones, speakers and digital note-taking tablets.

The company's speakers and microphones use on-device AI capabilities to improve sound quality and are widely used in company meeting rooms and university classrooms, he said.

The timing could hardly be better.

Earlier this month, the U.S. and China agreed to pursue "constructive strategic stability," signaling a broader effort to stabilize ties after more than a year of escalating tensions and tariff hikes that at one point pushed cumulative duties above 100%.

Now, the extended truce suggests those levies could remain at about half those levels for longer.

For Zou, tariffs and market access remain the biggest concerns. But for at least the next three to five years, he's hopeful that the U.S.-China relationship won't deteriorate further.

The bigger challenge for winning U.S. customers, he said, is branding.

AI Speech is exploring acquisitions and local hiring as part of its U.S. expansion strategy, he said, hinting at conversations with New York electronics retailer B&H.

The theme echoed conversations I had with other executives: recent trips to the U.S. and Europe, discussions with major American retailers and renewed plans for overseas growth.

"We're talking with Best Buy right now," Guo Renjie, CEO of humanoid robot startup Zeroth, told me in Suzhou last week.

He claimed the company received many orders at the Consumer Electronics Show in January, and plans to start sales this fall in the U.S. and Europe, initially focusing on a toy-sized interactive robot.

Patrick T. Fallon | Afp | Getty Images

Encouraging investment

Chinese investment in the U.S. has plunged over the last decade.

Still, officials on both sides are looking for areas where cooperation remains possible.

The U.S. and China said this month they would establish trade and investment boards focused on non-sensitive sectors, U.S. Treasury Secretary Scott Bessent told CNBC.

Fast-growing Chinese consumer companies are also exploring overseas acquisitions, such as the reported acquisition of sustainable fashion brand Everlane by online retailer Shein.

At the state level, engagement continues.

"I see a lot of collaboration happening," said Andrea Chartock, assistant director at the Washington State Department of Commerce's Office of Economic Development and Competitiveness. "Just a few days ago, I spoke at an event for a Chinese delegation and we made some presentations both from Washington State and Seattle as well as from the Chinese side," she said.

Chartock spoke with me in Chongqing last week as part of a delegation from Seattle. The two metropolitan areas have been "sister cities" for decades — a municipal-level agreement to facilitate trade and international exchange.

A few days later in Suzhou, trade ministers from the 21 member economies of the Asia-Pacific Economic Cooperation gathered for a conference.

Casey Mace, the senior U.S. APEC official attending, told me how Washington is pushing American AI solutions across Asia while also encouraging more investment in the U.S.

The Trump-Xi summit, he said, has contributed to a more "positive" tone in recent working-level discussions.

Chinese companies, meanwhile, are trying to get ahead of data security concerns and tariff-related risks.

Zou emphasized that AI Speech products do not upload user data, and that U.S. customers who choose to buy any AI features would be served through its international data centers.

And Zeroth's Guo said he's exploring U.S. manufacturing options, particularly in Texas, to reduce tariff exposure.

At the end of the day, he said, "China and the U.S. are still the largest markets."

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