BBC Asia reports: Trump and Xi are set to meet. It will also mark a key test in the fragile trade truce between Washington and Beijing.In April 2025, Trump unveiled sweeping import taxes on countries across the world, friend or foe.A major effect of that policy was a tit-for-tat trade war between the US and China that saw them hit each other with tariffs that topped 100%. The tariffs were paused after Trump and Xi's last face-to-face meeting in South Korea in October.
But threats from both sides have continued.With so much at stake, here's how we got here. On Trump's so-called Liberation Day, he set a 34% levy on Chinese goods, making the total tariffs on China among the highest of any country.The tariffs shook Chinese businesses and led to goods piling up in warehouses, while US firms scrambled to find alternative supplies.Beijing quickly retaliated with its own measures, including duties on US agricultural goods, hitting farmers - a key Trump voter base.But Trump doesn't appear to have accounted for China's near-monopoly of the world's supplies of rare earths - crucial for making everything from smartphones to fighter jets.
Background
Trump had used tariffs to force countries to make deals favourable to the US. But he couldn't risk key businesses that rely on China's raw materials. It was time to bargain.A meeting between Trump and Xi in October ended with Beijing suspending those export controls, marking a win for Trump.
Key facts
- The tariffs were paused after Trump and Xi's last face-to-face meeting in South Korea in October.
- But threats from both sides have continued.With so much at stake, here's how we got here.
- Trump had used tariffs to force countries to make deals favourable to the US.
What this means
While a tariffs truce was agreed last year, a permanent resolution to the dispute has so far remained elusive.China's heavy investment in manufacturing means its businesses have little choice but to sell abroad as spending at home remains weak, Tang said."It will need the US. There is little doubt that the Iran war will loom large over the Trump-Xi meeting.With its vast oil reserves and diversified energy sources, China has so far appeared to weather the fallout of the war better than many of its neighbours.China is a major oil producer, while most of its imported crude comes from Russia. These factors have helped cushion the impact of the conflict, despite Beijing being Iran's biggest buyer of oil.Still, there are signs that as the war drags on it is testing the Chinese economy, with senior officials pledging strong measures to protect China's energy security and supply chains, Morris said.And so while both Beijing and Washington might be incentivised to bring an end to the conflict - both sides have major differences in their views on Iran - and the world will be watching how, and if, they manage to overcome this.
China weathered Trump's tariffs - but the Iran war is taking a toll'What is the game plan?': The Iran war is unsettling China and its ambitions Xi JinpingInternational BusinessChinaGlobal tradeDonald TrumpUnited States
Originally reported by BBC Asia. This story has been edited and re-presented by BRIC Team.
