Trump and Xi Clash Over AI, Trade and Iran While Seeking Stability

WASHINGTON – State visits typically signal friendly relations. Yet President Donald Trump is welcoming Chinese leader Xi Jinping to Washington this week as the two countries’ economic and technological rivalry intensifies, with artificial intelligence emerging as a central battleground.

Neither leader is expected to secure a sweeping agreement. Instead, Trump and Xi are likely to maintain a cooperative tone during their third meeting since Trump returned to the White House, seeking to stabilize an increasingly fragile relationship. The world’s two largest economies are still competing for an edge in AI and trade while maneuvering for influence in longstanding flash points, including Iran and Taiwan.

“The fact that they are meeting, and there’s dialogue occurring and building that relationship, is probably as important as outcomes from the meeting,” said Sen. Steve Daines, a Montana Republican who advises Trump on China and recently visited the country to help prepare for the summit.

Cui Tiankai, a former Chinese ambassador to the United States, said at a recent forum in Beijing that the two countries face “always problems, sometimes very big problems,” but added that “we’ll make our best efforts to maintain overall stability.”

Trump and Xi have stepped back from punishing tariffs, but rivalry remains fierce

Xi’s visit to Washington, beginning Wednesday, will be his first in a decade. The meeting follows a retreat from last year’s damaging trade war, when the two countries imposed tit-for-tat tariffs that threatened the global economy. China also restricted access to its dominant supplies of critical minerals, materials used in everything from electric vehicles to fighter jets.

Washington is seeking not only to rebalance trade but also to preserve its technological advantage, which it views as essential to national security and global leadership. China, meanwhile, has built substantial economic, technological and military strength in recent years, narrowing the gap with the United States and working to secure a stronger position in the international order.

The stability sought by both governments is driven by “deeply competitive reasons,” said Evan Medeiros, a senior adviser at The Asia Group consultancy. “This is basically two geopolitical strongmen circling each other on the playground, trying to determine what their next move may be.”

Despite blacklisting each other’s companies and restricting high-tech trade, the two nations appear to be moving toward a “new normal” of “overall stability,” said Da Wei, director of the Center for International Security and Strategy at Tsinghua University in Beijing.

The leaders now need to deliver agreements their governments can implement, Da said, adding that “we need to move fast.”

The AI competition could complicate even limited cooperation

Artificial intelligence has become a major front in the U.S.-China rivalry, and neither side shows much appetite for slowing development despite warnings from technology executives about the dangers advanced AI could pose to humanity. “Whoever wins AI wins,” Trump has repeatedly said.

On social media Monday, Trump claimed the United States was ahead of China and said he was “not going to stifle Growth, of something that will be bigger than the Industrial Revolution, or the Internet, itself.”

China is equally determined to keep pace. In an unusually direct essay, Chen Yixin, head of China’s Ministry of State Security, warned that AI could threaten Communist Party rule if foreign and hostile forces gain superior capabilities.

The United States already limits exports of its most advanced AI chips to China and has accused Chinese developers of using American AI models on an industrial scale to obtain their capabilities.

Beijing argues that the practice, known as distillation, is common across the industry, including among U.S. companies. It has also criticized Washington for seeking to monopolize AI development.

China is also angered by U.S. efforts to establish an alliance that leaves Beijing out. In response, it is trying to shape global AI safeguards by appealing to developing countries.

Still, Washington and Beijing are exploring a limited form of cooperation on artificial intelligence.

IN CASE YOU MISSED IT: The New Status Symbol Emerging in Trump’s Inner Circle

Treasury Secretary Scott Bessent said Sunday, after meeting Chinese Vice Premier He Lifeng in New York, that the United States had proposed a new “notification mechanism” for AI incidents that could affect national security.

“We think that just like any cross-border activity, that moving from opaque to more transparency between the No. 1 and the No. 2 AI powers in the world is very important,” Bessent said.

US and China have turned to targeted ways to compete instead of high tariffs

While the U.S. and China have refrained from taking broad, punitive actions that would break their trade truce, they still are blacklisting individual companies and banning specific products.

“What we’ve seen is kind of testing and probing by both sides to understand what can be done competitively, while still keeping that leader-level rapprochement on track,” said Mira Rapp-Hooper, a visiting fellow at the Brookings Institution’s Center for Asia Policy Studies.

The U.S. has recently targeted Chinese telecommunications and surveillance equipment, companies accused of using forced labor in the ethnic region of Xinjiang, as well as China’s advanced robots and drones. The Pentagon also has barred Alibaba, BYD, Baidu and other major Chinese businesses from receiving U.S. defense contracts.

Beijing responded with export controls on drones and related technologies as well as blacklisting six U.S. companies over their support for the punitive measures tied to Xinjiang.

Iran, Taiwan and tariffs are persistent issues

After the Supreme Court struck down Trump’s tariffs on trade partners this year, the administration has been trying to impose them in other ways.

The White House in July rolled out a 12.5% tariff on imports from 60 trading partners, including China, ostensibly for failing to do enough to prevent the import of goods produced by forced labor. The U.S. is planning an additional 7.5% tariff on China, accusing it of producing far more goods than it can reasonably consume.

Analysts say the tariff levels are now acceptable to both sides, but any significant uptick could rekindle tensions.

The Trump administration, however, has launched a campaign to isolate Iran from its remaining economic partners, but Beijing has insisted on its right to trade with Tehran.

So far, the Trump administration has done little to punish China, partly to avoid jeopardizing the leaders summit. But Washington also is losing leverage because China — Iran’s biggest oil buyer and its largest trading partner — has been building up a way to make payments outside the U.S.-led financial system, said Alicia Garcia Herrero, an Asia-Pacific economist at the French investment bank Natixis.

Taiwan, a self-governing island that Beijing claims as its own territory, also remains one of the thorniest issues in U.S.-China relations. Trump paused a large weapons package to Taiwan following his May trip to Beijing, but the U.S. is obligated by a domestic law to provide it with sufficient hardware and technology for self-defense.

Analysts say Xi will most likely press Trump to further delay arms sales to sow doubts in Taiwan about Washington’s commitment.

___

Castillo reported from Beijing.