President Trump and Xi Jinping met last year in Busan, South Korea, to establish a trade truce that restored stability to a strained economic relationship. The agreement required Trump to roll back punishing tariffs on Chinese exports and China to resume critical mineral exports. As Xi prepares to visit Washington this week for talks on AI dialogue and trade in nonsensitive goods like energy and consumer products, underlying tensions persist.

Both nations accuse each other of violating the truce: U.S. officials cite China’s continued restrictions on mineral exports vital for cars, semiconductors, and power tools, while China’s farm goods purchases fall short of promises. U.S. companies face challenges from China’s State Council decrees since March, which expand government control over foreign firms, restrict supply chain audits needed for forced labor compliance, and penalize adherence to foreign sanctions. These rules also tighten oversight of outbound investments and mineral exports. Meanwhile, the U.S. continues to bar Chinese technology, including routers and humanoid robots, and has labeled China’s copying of American AI models as “industrial distillation.” In June and July, the U.S. added Chinese firms to military and forced labor blacklists, prompting China to sanction seven U.S. firms involved in supply chain verification, including Xinjiang cotton testing.

Treasury Secretary Scott Bessent acknowledged the strong personal rapport between Trump and Xi but warned that surface-level diplomacy does not excuse undermining actions beneath the surface.