Guardrails Without Trust
Despite Headline Trade Agreements, Washington and Beijing Remain Divided on the Issues Most Likely to Trigger Future Confrontation.
From the 13th to the 15th of May, Donald Trump visited Beijing for discussions with Xi Jinping in an attempt to improve the damaged relationship between the two nations. Trump described the outcome as “fantastic trade deals, great for both countries”, but the summit’s own readouts suggest a much narrower result. What emerged was not a reset in U.S.-China relations, but a pragmatic attempt to create guardrails without trust. The summit offered enough progress to calm markets at the margin, but not enough to change the underlying trajectory of strategic competition.
The Trump–Xi summit is therefore better understood as a selective stabilisation mechanism than as a strategic breakthrough. It produced limited de-escalation in low-sensitivity sectors while leaving the central risk drivers intact: Taiwan, tech controls, tariffs, and energy insecurity in the Middle East. From a political-risk perspective, the key outcome was not reconciliation, but a temporary reduction in trade friction without any meaningful reduction in structural rivalry.
Limited successes
The clearest achievement of the summit was a package of visible, commercially tangible deals in relatively non-sensitive sectors. Agreements spanned agriculture, aviation, electric vehicles, and AI chips, although few details were publicly clarified. The White House stated that China would buy $17 billion ofU.S. agricultural products annually through 2028, while both sides were also expected to identify around $30 billion of goods that could be traded without crossing national-security red lines. The two sides also agreed to establish trade and investment councils, and, in principle, to lower tariffs on products of mutual concern on a reciprocal basis. Politically, this reduces short-term uncertainty for sectors exposed to trade volatility and gives both governments a visible success they can present domestically. At the same time, it suggests a shift toward numerical trading targets and limited sectoral bargains, rather than any broader attempt to resolve the underlying economic dispute.
Even these gains, however, were narrower than they first appeared. The Boeing deal illustrates this limitation especially clearly. Trump stated that China had agreed to buy 200 Boeing jets, with a possible additional 750 if the first tranche went well, and Boeing also confirmed the deal. However, Boeing shares still fell by 4% because the announced 200 jets were significantly below the roughly 500 that sources had expected. That gap suggests that even one of the summit’s headline deals looked more like a symbolic stabiliser than a transformative commercial breakthrough. More broadly, U.S. and Chinese readouts emphasised different elements of the agreements, with some specifics only appearing in one side’s account and not being immediately confirmed by the other. That asymmetry reinforces the impression that the summit produced politically useful announcements, but not a fully consolidated or transparent settlement.
More importantly, the summit’s hardest disputes were not solved at all. The summit appears to have generated movement where both sides could safely claim success, while leaving the most politically charged issues largely untouched. On tariffs, Trump said that he and Xi had not discussed them at all, even though other readouts suggested tariff reductions would be handled through the new trade council. China indicated that reducing tariffs would be part of the plan, while the U.S. readout did not mention duties. On advanced technology, there was likewise no breakthrough in selling Nvidia’s advanced H200 AI chips to China. Trump was quoted as saying that chip discussions did not come up and that China might simply “want to try and develop their own” chips. U.S. export controls aimed at limiting China’s access to frontier AI capabilities were also not a major talking point. From a risk perspective, the summit may have reduced friction in trade, but it did not relax the core technological containment logic in U.S. policy.
Persistent strategic risks
The clearest evidence that the summit did not resolve strategic rivalry came on Taiwan. Xi described Taiwan as the most sensitive issue in the relationship, and he warned in closed-door talks that mishandling it could lead to conflict. That message was reinforced by his use of the “Thucydides Trap” language to frame the danger of conflict between a rising power and an established one. As presented in the summit readouts, Xi argued that Beijing and Washington could enter an “extremely dangerous place” if the United States sought to impede China over Taiwan. Trump said he “heard Xi out” on Taiwan and made no commitment either way, while Marco Rubio stated that U.S. policy on Taiwan remains unchanged. In other words, this summit may have improved the atmosphere, but it left the most consequential trigger for escalation fully in place. Taiwan, therefore, still sits above all other issues as the clearest tail-risk scenario.
Iran and the Strait of Hormuz offered yet another example of failed strategic coordination. Trump suggested China could use its influence to help stabilise flows through the Strait of Hormuz. However, China offered no clear help on Iran beyond a general statement in support of peace. In practice, there was no specific Chinese commitment regarding the crisis. Trump claimed Xi said China would not provide military equipment to Tehran and that both sides agreed Iran could not obtain a nuclear weapon. Even so, broader concerns remain over China’s economic support for Iran through oil purchases, dual-use exports, and intermediary networks. The limits of summit diplomacy are therefore especially visible in this area: rhetorical convergence did not produce concrete coordination.
China remains structurally important to Iran’s economic resilience. Malaysia has emerged as China’s third-largest oil supplier in 2024, but this almost certainly reflects oil imports from Iran and Venezuela that are being concealed as Malaysian in order to evade U.S. sanctions. China’s crude imports from Malaysia rose from 5,400 barrels per day in 2015 to 1.4 million barrels per day in 2024, even though Malaysia itself produced only 565,000 barrels per day in 2024. The difference strongly suggests that oil is being exported from Iran and delivered to China via ship-to-ship transfers off Malaysia, as uncovered by the Centre on Global Energy Policy. China is also estimated to purchase about 90% of Iran’s exported oil. That makes Beijing structurally important to Iran’s resilience, regardless of any summit language about de-escalation. The broader political-risk point is that even where Washington and Beijing share an interest in avoiding regional energy disruption, they do not appear willing to align on the concrete measures needed to manage that risk.
Summit changed the tone, not the structure
Both sides used language suggesting they wanted to stabilise the relationship rhetorically. Beijing spoke of a “new positioning” based on constructive strategic stability, while also emphasising continued engagement, trade councils, and tariff discussions. Chinese messaging further reinforced this softer tone by invoking the IMF’s view that reduced trade tensions and reduced uncertainty would benefit both economies and the global economy. Yet the substance of the summit points more to managed coexistence without strategic trust. In practical terms, the summit reopened channels, defined a few areas of bounded cooperation, and lowered immediate pressure. It did not, however, alter the underlying logic of competition over security, technology, or regional influence.
The summit, therefore, reduced immediate escalation risk in selected commercial areas, without materially reducing long-term geopolitical risk. In fact, by ring-fencing the most difficult disputes rather than addressing them, it may have made the relationship appear calmer than it actually is. That creates a classic risk-management problem for investors and policymakers: short-term reassurance can coexist with unresolved structural vulnerability. The most likely near-term implication is greater tactical stability, especially for agriculture and some trade-exposed sectors. The most important medium-term implication, however, is that the core confrontation remains in place and may reassert itself quickly through any shock involving Taiwan, export controls, tariffs, or Middle East energy flows.
Move from symbolic summitry to sector-specific risk management
The priority now should be to move from symbolic summitry to narrow, enforceable, lower-sensitivity mechanisms rather than pretending that a broader reset is possible. The first step is to institutionalise the new trade and investment councils quickly. If these are left vague, the summit risks becoming mostly rhetorical. They should instead be used to produce clear implementation timetables, especially on agriculture, aviation, and tariff treatment for non-sensitive goods.
A formal crisis-communication channel should also be established around Taiwan. Since Taiwan remains the main escalation trigger, the most realistic objective is not resolution, but miscalculation prevention. If “constructive strategic stability” is to mean anything in practice, it must include direct military-political communication protocols designed to manage crises around the island.
Another lesson of the summit is that the relationship is now too adversarial for a comprehensive settlement. The practical response is therefore to ring-fence commercially useful sectors while accepting that advanced chips and other sensitive technologies will remain contested. That is not an ideal outcome, but it is the most realistic one under current conditions.
Finally, maritime energy stability is one of the few remaining areas where interest-based cooperation may still be possible. Because disruption in Hormuz affects both sides, Washington and Beijing should pursue at least a minimal shared mechanism for de-escalation around oil flows and regional shocks. This would not amount to strategic trust, but it could still reduce the risk of wider economic disruption. If Washington and Beijing cannot build trust, they should at least build procedures.
Conclusion
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