U.S.-China Relations Tested as Leaders Face Off Over Trade and Tech
The world’s two largest economies are preparing for their most high-profile encounter in years.
U.S. President Donald Trump confirmed he will sit down with Chinese President Xi Jinping at next month’s Asia-Pacific Economic Cooperation summit in South Korea, in what could be a pivotal moment for relations strained by technology disputes, trade fights, and geopolitical flashpoints.
TikTok at the Center of the Deal-Making
For Trump, the immediate prize is progress on TikTok’s U.S. future. His administration has pushed ByteDance, the app’s Chinese parent company, to spin off American operations. Behind the scenes, negotiators have outlined a framework that would limit ByteDance’s stake to no more than 20%, with U.S. investors such as Oracle, Andreessen Horowitz, and Silver Lake expected to take control.
Trump hailed “progress” after his latest call with Xi, framing TikTok as part of a wider agenda that also touched on trade disputes, fentanyl trafficking, and even the war in Ukraine. For Xi, however, the emphasis was different: China’s foreign ministry described the talks as “positive and pragmatic,” while urging Washington to create fair conditions for Chinese businesses rather than tightening restrictions.
Trade and Tech as Flashpoints
Even as TikTok dominates headlines, the larger economic rivalry simmers in the background. The U.S. has added dozens of Chinese companies to its export control lists this year, targeting sectors from semiconductors to rare earths. Beijing has retaliated with investigations into American-made chips and restrictions on imports.
Tariffs remain in play as well. Trump has used them as leverage in pursuit of a broader deal, while signaling that some duties could be lifted if Beijing takes steps on fentanyl. But looming over those negotiations is a pending Supreme Court ruling that could limit the president’s tariff powers altogether.
Trump’s softer tone on TikTok reflects shifting domestic considerations. Once a critic who floated outright bans, he now credits the platform with helping him connect to younger voters. That political incentive has made him more willing to extend deadlines for divestiture, even if it raises questions about the legal basis for allowing the app to keep operating.
Why APEC Matters
Analysts say the APEC meeting, though less formal than a state visit, could reset the relationship if both leaders can strike a workable deal. Expectations are tempered: a “grand bargain” on trade, tech, and security is unlikely. But smaller breakthroughs — whether on TikTok, tariff rollbacks, or Boeing plane orders — could show that Washington and Beijing are at least capable of pragmatic compromise.
As Neo Wang of Evercore ISI put it: “If they can solve TikTok, they can probably solve other disputes in future rounds.”
For now, the TikTok saga has become more than a corporate divestiture fight — it is the emblem of whether the U.S. and China can coexist in a global economy increasingly defined by mistrust.
Source: Bloomberg
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