After a decade of elevated tensions, Washington and Beijing now find themselves navigating relatively calm waters. Last October, U.S. President Donald Trump and Chinese leader Xi Jinping reached an agreement in Busan, South Korea, to pause the trade war between their two countries. The truce paused new U.S. tariffs and rolled back Chinese restrictions on American access to rare earths and magnets. That reprieve is real—but fragile.

Expectations are high that the next time the two leaders meet—originally scheduled to be March 31, in Beijing, but now delayed at Trump’s request because of the U.S. war in Iran—they will reaffirm and potentially extend their trade war truce. But the truce is driven less by a desire to resolve underlying challenges in the U.S.-Chinese relationship than by a convergence of interests between the countries’ leaders to buy time for their own domestic self-strengthening projects. What will determine the balance of power for years to come is not what Trump and Xi say to each other at this highly staged summit but what the United States and China each does during this larger respite of calmer relations. For Washington, the task is clear: use the lull to reduce dependencies on China and regenerate national power.

Postponing the summit will not, on its own, have a significant effect on what gets discussed and decided when the two leaders meet. Over the longer term, much of U.S.-Chinese strategic competition will turn instead on which country exercises greater focus on nurturing its sources of strength. China is currently outperforming the United States on this score. The United States, meanwhile, has again found itself drawn into a costly conflict abroad while it practices fiscal indiscipline at home. To take advantage of this current period of fragile stability in its relations with Beijing, Washington will need to wind down its military operations in Iran and refocus on a more consequential national imperative: rebuilding capacity to compete with China.

A year ago, a truce between Washington and Beijing seemed unlikely. Early in his second term, Trump escalated trade tensions sharply, raising tariffs to 145 percent in April 2025. But after China retaliated with higher tariffs of its own and threats to withhold rare-earth exports, Trump reversed course. In the second half of 2025, he shifted to a more conciliatory posture, praising Xi, lowering tariffs, describing China as a peer of the United States, and deemphasizing sensitive issues such as Chinese human rights abuses and cyberattacks in favor of dealmaking. Limiting U.S. export controls on semiconductors went from being completely off the table—for national security reasons—to a potential deal sweetener. Instead of signaling resolve to defend Taiwan, Trump took to acknowledging the importance that China places on the island.

Trump’s shift has been motivated by at least four related factors, which broadly demonstrate his apparent judgment that there is more to gain from productive and predictable relations with China than adversarial ones. First is the growing number of challenges confronting Trump abroad—including in Gaza, Iran, Ukraine, and Venezuela—and rising domestic pressures around affordability and immigration. With such a full plate, it stands to reason that Trump would want to reduce volatility in U.S. relations with China.

Trump’s recalibration also appears to be the result of a recognition that China can inflict serious damage in response to American economic coercion. The administration appeared to be caught off-guard by China’s move to weaponize rare-earth, critical mineral, and magnet exports in response to Trump’s tariff escalation in April 2025. These products are used in a vast array of modern electronics, and American firms source most of them from China. Losing access to them could bring some U.S. factory floors to a standstill.

Trump and Xi’s trade war truce represents no more than a gentleman’s handshake.

American voter sentiment, too, has pushed Trump to change course. Although elite preferences in Washington remain hawkish toward China, many Americans are increasingly less so. In a July survey by the Chicago Council on Global Affairs, respondents ranked avoiding a military conflict with China as the most important priority for the U.S.-Chinese relationship. In the same survey, a majority of respondents (53 percent) agreed that the United States should “undertake friendly cooperation and engagement with China” to deal with its increasing power—up from 40 percent in 2024. And in a November survey by the Carnegie Endowment for International Peace, 62 percent reported that their lives would not get worse if China were “to surpass the [United States] in global power and influence.” In other words, a growing number of Americans appear more resigned to China’s rise than in a mood to fight it.

Finally, Trump values making deals, and especially with Xi. He views stable and smooth relations with China as the most lucrative path for securing the agreements he covets on trade, TikTok, and curbs on chemicals used to make fentanyl. He appears willing to subordinate long-standing issues of bilateral tensions, such as China’s bullying of U.S. allies, to secure near-term tangible benefits such as Chinese purchases of U.S. soybean exports. Trump has not yet demonstrated any fear of possible political repercussions for making these tradeoffs.

None of this makes the calm in U.S.-Chinese relations durable, however. Trump and Xi’s agreement to a trade war truce represents no more than a gentleman’s handshake, held together by the two leaders’ acceptance of the constraints of economic interdependence and their shared interest in stability over confrontation. The two governments have deferred, not resolved, the underlying tensions that originally drove the relationship toward confrontation. And many policymakers across the U.S. government prefer to view this period as a temporary stalemate and are eager to return to full-spectrum great-power competition with China. A single exogenous shock—a military incident in the Taiwan Strait, another spy balloon incident, or accusations of Chinese interference in U.S. elections—could quickly unravel the delicate truce.

Trump and Xi’s trade war truce was effectively an agreement to buy time. What each side decides to do with that time will determine where U.S.-Chinese competition goes—and who ends up with the upper hand.

Beijing’s intention is clear. Its new Five-Year Plan, adopted in March, asserts that the country will focus on reducing reliance on foreign technology and imports while accelerating domestic industrial modernization and technology innovation. China will pursue dominance in emerging technologies by spreading its bets across a range of sectors such as robotics, 6G mobile communication, and embodied artificial intelligence (meaning AI integrated into physical objects such as robots and drones). Chinese leaders view this portfolio approach to spurring technological advances as having better odds for national progress than the United States’ all-in bet on artificial general intelligence. Beijing wants to lock in China’s centrality to the global economy, accelerate economic growth, and reduce its vulnerability to Washington’s export controls, sanctions, and investment restrictions.

The United States, on the other hand, has a less centralized plan for accelerating broader economic growth. The Trump administration has correctly identified economic and technological power as the foundations of twenty-first-century national security. It also seems to believe that the United States’ possession of such power has been eroding relative to China’s. The remedy, in Trump’s view, is to lower tensions with Beijing and concentrate financial and human resources on rebuilding American manufacturing capacity with an emphasis on the defense industrial base.

A single exogenous shock could quickly unravel the delicate truce.

If the United States wishes to succeed in its competition with China, it will need to move quicker and with more purpose. Strengthening American economic and technological power will require that Washington prioritize efforts to unwind dependencies on China across various supply chain chokepoints, beginning with critical minerals, rare earths, and magnets. These are prerequisites for national security. To secure them, the Trump administration should expand long-term contracts and purchasing guarantees, which would increase certainty about access; accelerate environmental reviews of domestic mining and refining to increase output; and fund midstream processing to accelerate the creation of a mine-to-magnet supply chain that has no production in or dependencies on China. It also will need to build stockpiles of those resources and set price floors to prevent China from undercutting U.S. and allied producers, thereby wiping out competition and distorting the market.

To strengthen U.S. defense capabilities, the administration should simplify and streamline the procurement process and invest in critical workforce pipelines in areas such as shipbuilding and munitions stockpiling. It should also continue pressing U.S. allies and partners to take on more of the burden for their own defense, which would free up U.S. resources to bolster deterrence against China—although such a redirection would also require Trump to concentrate less on Greenland, Iran, or Venezuela.

U.S. efforts to secure its supply chains are commendable, but any such progress should not be celebrated too quickly. Japan’s experience suggests that there are no quick fixes to reliance on China. Tokyo is more than a decade ahead of Washington in its drive to reduce critical mineral and rare-earth dependencies on China: at its peak, in 2010, Japan sourced roughly 90 percent of its rare earths from China, but today, that proportion has dropped to 60 percent. The United States still imports about 70 percent of its rare earths from China. And rare earths are only one chokepoint. China controls midstream processing in other crucial supply chains, such as active pharmaceutical ingredients, batteries, drones, robotics, and solar manufacturing. Any expectation that Washington will escape economic interdependence from China is an illusion. Progress will have to be measured in degrees.

The administration’s lack of visible preparation for Trump’s upcoming visit has puzzled many analysts. But this is a feature of Trump’s approach to China, not a bug. When it comes to the United States’ relationship with China, Trump is the center of attention. He understands the U.S.-Chinese relationship as an extension of his own personal ties with Xi. He views his phone calls with Xi, as well as spoken messages and letters, as the backbone of preparations for his visit. More traditional coordination between the U.S. and Chinese leaders’ advisers is less consequential.

The lack of a formal preparatory process has generated some disquiet in Beijing, but it has not produced alarm. Beijing has no doubt taken note of the three-stage approach that foreign leaders and American corporate titans have employed to influence the president: flatter him, give him a gift, and pledge future investment. A Chinese variation of this pattern will almost certainly be on display when Trump visits China.

The status quo is tolerable for Beijing.

This approach could produce a few tangible agreements at the next summit. Trump is likely planning to press Xi to buy more U.S. exports and might even welcome direct Chinese investment in the U.S. economy in areas not related to national security, such as consumer product manufacturing. He will also want to reaffirm and potentially extend his trade war truce with Xi, and to seek Xi’s support for unwinding conflicts in Ukraine and Iran. Although Beijing is unlikely to offer concrete commitments, Xi’s rhetoric will likely be supportive enough to placate Trump.

For Beijing, the prize will be more subtle but no less significant. Chinese officials will use Trump’s preoccupation with his relationship with Xi and with calming tensions to send a signal to U.S. partners in Asia that they should not depend upon the United States for their security. The message to Tokyo, Taipei, and elsewhere will be that Trump cares more about his relationship with China than he does about them, and that Trump accepts China as a peer of the United States on the world stage.

Even as Xi would prefer that Washington relax its tariffs, export controls, investment restrictions, and military presence along China’s periphery, he does not feel a need to make major concessions to secure such relief. The status quo is tolerable for Beijing. A largely ceremonial visit by Trump that reaffirms a shared commitment to keep the bilateral economic relationship steady and to avoid flare-ups, particularly over Taiwan, would count as a win for Xi. Such ceremonialism is even more likely given plans for the two leaders to meet again several times this year.

What will be more important than a meeting in Beijing—whenever it happens—are the actions that each leader takes during this period of strategic calm they have set for themselves. China is using this time to narrow its vulnerabilities and bolster its advantages to strengthen its relative power compared to that of the United States. Washington needs to find a similar sense of urgency. It needs to avoid costly conflicts that drain national power and to instead secure supply chains, speed up industrial production, and push forward policies that spur innovation. Only if it uses this time wisely will Washington be able to demand more favorable terms for the next chapter of U.S.-Chinese relations.

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