Donald Trump rolls out the red carpet for Xi Jinping in retreat
By Tom Beckwith · Reporting from Washington ·
Facing economic pressure and failed leverage, Donald Trump trades his previous tough-on-China stance for a state dinner and a shaky commercial truce.
Interests first, capabilities second, statements last
When Donald Trump first ran for office a decade ago, he called China a menace to the U.S. economy, gutting America's factories and eroding the middle class. Today, those fiery stump speeches are gone, replaced by the warm aroma of a state dinner at the White House for Chinese President Xi Jinping.
According to AP News, Donald Trump shrugged off reports that China provided Iran with satellite imagery, stating that Xi has behaved reasonably well. Regarding China accessing U.S. voter files in 2020, Trump stated that China is maybe a little bit different today than it was then.
This diplomatic pivot is not a change of heart. It is a forced retreat. Nations have interests, not friendships, and a proper read of any capital begins with its raw capabilities. As Michael Kovrig noted, Trump dramatically shifted his approach to China because his initial attempt to use super-high tariffs and export restrictions was unsuccessful. Xi and Trump got into a contest of leverage, and Xi came out on top.
China holds a relative monopoly on rare earths used in electronics and deployed it to help force a trade armistice with Trump. Meanwhile, the U.S. economy is driven by investments in AI but faces persistent inflation, rising unemployment, and ballooning debt, with U.S. bond market yields continuing to rise, as reported by csis.org.
The first United States-China trade war (2017-2019) proved that punitive duties alone cannot erase a structural trade imbalance when the adversary holds critical supply chain chokepoints. China recorded a $1.2 trillion global trade surplus last year, while the Census Bureau figures show that the trade imbalance with China in goods has declined relative to the same period in 2025.
The mechanics of accession and optical appeasement
The strongest opposing case for this embrace rests on the utility of personal diplomacy. Proponents argue that summitry prevents miscalculation, locking in agricultural purchases and managing flashpoints through direct communication between leaders. Attorney General Todd Blanche told reporters at the White House that it is unfair to just label China as a country as being a bad actor on AI, adding that the two presidents get along and make deals together.
This argument mistakes personal rapport for strategic control. Evan Medeiros observed that we have this idiosyncratic president who believes in personal relationships and just wants to get along with Xi Jinping for the optics of getting along with him, coming at precisely the time when we really need to be amping up all dimensions of our competition.
This dynamic mirrors the Accession of China to the World Trade Organization. The shared mechanism is the pursuit of economic integration and trade stability as a primary tool for managing a strategic competitor's behavior. In both cases, Western capitals bet that drawing a formidable competitor into formal commercial frameworks would domesticate its ambitions through rules. Instead, Beijing used the breathing room to consolidate its manufacturing dominance.
By executing Xi's wedge tactics, Trump is helping Xi to tell a story about China as the more stable and responsible power. This has led to a wave of Western leaders visiting Beijing and seeking to stabilize relations so they can focus on problems Trump is causing them.
Pricing the truce five years out
The historical pattern predicts that temporary commercial truces built on personal vanity do not survive domestic political cycles. Xi Jinping is planning for the 21st Party Congress in the fall of 2027 to secure a fourth five-year term as head of the Chinese Communist Party, while the Trump administration is facing upcoming midterm elections.
What would have to be true for this time to differ is a permanent codification of rare earth supply chains into binding domestic U.S. production, an outcome the current wobbly bond market and sluggish domestic smelter capacity make nearly impossible. Instead, the Kuala Lumpur Joint Arrangement and its impending expiration points toward a sudden return to tariff escalation once the political necessity of the summit fades.
The costs of this transactional diplomacy will be paid five years hence, when the supply chain dependencies remain untouched, and American credibility in allied capitals has been spent on state visit optics. If your word in foreign capitals is measured by the durability of your posture, the red carpet rolled out for Xi Jinping is bought on credit we cannot afford to service.