The United States and China have entered a new round of managing economic tension between them, with the arrival of Chinese President Xi Jinping in Washington on his first visit to the United States in about three years, amid an agreement to extend the trade truce until January 10, but without strong indications so far of a broader settlement of the disputes that include customs duties, chips, rare metals, and artificial intelligence.
US Treasury Secretary Scott Besent said that the two sides reached an agreement to extend the truce, which was scheduled to end on November 10, giving the negotiators an additional two months to work on broader understandings. The announcement came as US President Donald Trump personally received his Chinese counterpart upon his arrival at Joint Base Andrews in Maryland.
Xi said, in a written statement issued by the Chinese embassy, that “China and the United States should be partners, not adversaries,” without directly referring to a trade agreement.
The visit carries an economic importance that goes beyond the protocol nature, after the tariff war in 2025 shook global markets and pushed mutual duties between the two largest economies in the world to levels exceeding 100 percent on some goods. Extending the truce would reduce, even temporarily, the risk of a return to escalation.
A truce instead of a comprehensive agreement
Expectations appear limited regarding the summit's ability to produce a broad trade agreement. The most sensitive issues are still unresolved, most notably US restrictions on the export of advanced chips, Chinese controls on rare earth metals, in addition to flows of agricultural goods and technology.
Thursday's talks may result in lowering fees in specific sectors or understandings on combating drug trafficking, in addition to opening new channels for discussion about artificial intelligence. However, these results, if achieved, will fall within the framework of managing competition rather than ending it.
Despite their differences, the two countries seek to demonstrate a degree of stability between the world's largest industrial base and the largest consumer market. Businesses on both sides need clearer visibility into tariffs, supply chains and investments, as commercial decisions become increasingly linked to the outcomes of high-level political meetings.
China enters the talks in light of the strength of its exports, but at home it faces weak household spending and a continuing real estate market crisis. As for the United States, it is facing a rise in energy prices after months of war with Iran, which increases the sensitivity of any trade measures that could raise the costs of goods for consumers.
Boeing is testing the limits of détente
The aircraft issue represents one of the clearest examples of the difficulty of converting political calm into major trade deals. Hopes that China would announce a broad new commitment to purchase Boeing aircraft during the summit have declined.
Instead of seeking a new order for hundreds of aircraft, the American company is currently focusing on completing an initial agreement concluded in May to sell 200 aircraft to China, according to informed sources.
Discussions before the May summit included the possible purchase of up to 500 aircraft, but the final agreement was smaller than expected. Boeing CEO Kelly Ortberg at the time described the order for 200 aircraft as an “initial batch,” considering that the main gain was the reopening of the Chinese market to the company.
Boeing had been effectively deprived of large Chinese orders since 2017, while its European competitor, Airbus, strengthened its share in one of the most important global aviation markets. The two companies estimate that China will need about 9,000 new aircraft by 2045, more than any other region.
Airbus has the additional advantage of having a final assembly line in Tianjin, in addition to having benefited over the past years from Chinese-European trade relations that are relatively less tense than the relations between Beijing and Washington.
Although hopes for a new deal are fading, there is still a chance for progress in implementing the May agreement. US Trade Representative Jamieson Greer said that about 140 orders were in “good standing,” while ten other orders were being completed. Some details may be announced during the summit if the contracts are completed.
Ensuring access to spare parts and engines was one of the issues that raised the concern of the Chinese side, especially after previous American threats to restrict supplies. China's Ministry of Commerce said in May that Washington had provided guarantees on the supply of engine parts and components linked to the aircraft agreement.
Technology is at the heart of competition
But aircraft are no longer the most important trade issue between the two countries. The center of gravity has clearly shifted to semiconductors, artificial intelligence and rare earths.
Washington adheres to export controls on advanced chips and related technology, while Beijing uses its dominant position in some rare earth supply chains as an important card in negotiations. This makes any trade truce directly linked to the security of global supply chains, and not just to customs duty levels.
The two sides are also expected to discuss the risks of artificial intelligence and the possibility of establishing channels for dialogue regarding it, despite the intense competition between American and Chinese companies for models, chips, and data centers.
The expected presence of heads of companies such as Apple, Nvidia, and OpenAI at the state banquet on Thursday reflects the increasing importance of technology in the economic relationship between the two countries. These companies depend to varying degrees on the Chinese market or Asian supply chains, while at the same time becoming part of the strategic competition between the two powers.
Two additional months for markets and companies
Extending the truce does not eliminate disputes, but it gives companies and investors an additional period of relative stability. For American exporters, especially in agriculture and aviation, continued access to the Chinese market is a priority, while Beijing needs to avoid additional restrictions on American technology and preserve export markets at a time when domestic demand is weak.
On the other hand, it is difficult to expect the economic relationship to return to the model that preceded the tariff war. Trade policy has become linked to national security, technology, Taiwan, and Chinese relations with Iran, making reaching a comprehensive agreement more complex.
Hence, the Washington summit seems closer to an attempt to put up barriers that prevent competition from turning into a new economic confrontation. Extending the truce until January gives both sides time, but also postpones the more difficult decisions on Chinese chips, metals, tariffs and purchases.
For global markets, the continuation of the dialogue may in itself be a calming factor after the turmoil of 2025. But the real test will come as the new expiration date of the truce approaches: either the political understanding is transformed into more sustainable trade arrangements, or companies and markets once again face the risk of escalation between the world’s two largest economies.
