U.S.-China Trade War Shifts Toward Leverage as Trump and Xi Prepare for Busan Meeting
The U.S.-China trade war is transitioning from a tariff dispute to a contest of leverage, with Beijing quietly setting the pace. President Donald Trump’s return to office has focused on U.S. economic dominance, but experts suggest China now holds the upper hand due to its ability to exert pressure on global supply chains and critical technologies. Analysts highlight the potential for a strategic shift in the trade war during Trump and Xi’s upcoming meeting in Busan, South Korea, with tensions likely to remain unresolved.
As President Trump raises the volume, Beijing is adjusting the dials, fine-tuning export controls, critical minerals and supply chains. This dynamic leaves Washington reacting to Beijing’s playbook instead of writing the next move. The U.S. and China, as the world’s two largest economies, will meet on the sidelines of the Asia-Pacific Economic Cooperation Summit in Busan, South Korea, for their first face-to-face meeting since Trump’s return to office. This meeting is expected to be more about managing the situation rather than achieving significant breakthroughs, with both sides aiming for stability rather than compromise.
Experts suggest that the perception that China now holds the upper hand is misplaced, with some analysts arguing that Beijing’s economic strength is overstated. Clark Packard, a research fellow at the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute, said that the most important bilateral relationship is between the U.S. and China, but policymakers in the United States are overestimating China’s economic strength. He pointed to deep imbalances within China’s economy as evidence, highlighting the country’s heavy reliance on manufacturing and its increasing dependence on exports, which has made many parts of the world uneasy.
Henrietta Levin, a senior fellow on China studies at the Center for Strategic and International Studies, a Washington, D.C.-based nonprofit, said Trump and Xi will likely try to cool tensions on Thursday, at least for now. Both sides are seeking a period of stability in the relationship, with the possibility of a limited arrangement, but on whose terms remain to be seen. Levin said that the confidence in Beijing stems from its belief that the U.S. can’t absorb economic pain as deeply or as patiently as China can, betting that any trade war will hurt Washington faster and harder.
Levin emphasized the need for the U.S. to regain control of the diplomatic narrative and set the terms of the relationship rather than merely reacting. She warned that the U.S. may have lost sight of the structural economic issues the trade war was originally meant to address. This context highlights the complexity of the issue, where both countries are navigating a delicate balance of power with their own strategic priorities.