This week’s anticipated meeting between Presidents Trump and Xi is a critical moment for the future of the consequential U.S.-China relationship. Amidst the increasing escalation – the U.S. threat of new tariffs and export controls on U.S. software and China doubling down on rare earth leverage – President Trump has concluded a series of trade deals and cooperative arrangements on critical minerals with other markets, demonstrating he can and will make agreements with countries in China’s backyard. These events coupled with encouraging media reports and political signals from both sides are positive signs for this week’s summit. While a détente would lead to a global sigh of relief, if both sides continue a pattern of uneasy truces, the risk of even higher tensions remains.
Countries and industries remain keenly aware that the U.S.-China relationship is one misstep or aggravating policy decision away from bilateral escalation and increased global instability. This leaves all sides to hedge their bets if they perceive that Washington and Beijing could revert to confrontation at any moment. The global economic stakes remain immense. A 10% disruption in rare earth-dependent sectors could trigger $150 billion in global losses within a year. Analysts project cumulative global output losses of up to $2 trillion by 2030 if rare earth disputes remain unresolved. Recent market swings underscore the sensitivity: stock indices dipped sharply after China’s mid-October 2025 restrictions, with steep declines in EV, semiconductor, and defense-linked equities.
While the U.S. government could accelerate cooperation with Asia-Pacific allies on critical mineral extraction, it still faces a heavy lift. Building a domestic mineral refining ecosystem would take 5 to 7 years and cost up to $30 billion. China’s own vulnerability is tied to its dependence on U.S. software and design tools; losing access, as President Trump has threatened, would cripple industrial control and AI sectors in the short term. Yet export controls of that scope would also slash up to $70 billion in annual revenues for American companies and shake global confidence in the predictability of U.S. policy.
If the Trump–Xi meeting produces only a tactical pause — a détente without clarity — both economies risk drifting into an uncertain situation with ripple effects across the global economy. The global tech industry is hopeful that Presidents Trump and Xi deliver clear progress. Trump must signal that U.S. export controls can coexist with calibrated market openness and space for cooperation in emerging sectors such as energy and AI. Xi, for his part, must demonstrate practical reciprocity: easing operating licensing rules for foreign firms in China, halting rare earth export controls, and addressing unfair trade practices that have plagued China’s reputation for so long. Any commitments will require long-term efforts to maintain forward motion, keep communication channels open, and frequent oversight of senior leaders. Despite the vast challenges between these two countries, it's crucial that they find a way to co-exist.