Taiwan Arms, Rare Earths, Tariffs And Iran Hang Over Trump-Xi Summit

Taiwan arms sales, rare earth supplies, tariffs and the war with Iran are hanging over President Donald Trump’s summit with Chinese President Xi Jinping in Washington as the two leaders try to steady relations while bargaining over major economic and national security disputes.

Trump welcomed Xi to the White House Thursday for the Chinese leader’s first visit to Washington in more than a decade and their second summit this year. The meeting follows Trump’s May trip to Beijing, where the two leaders agreed to pursue what the White House described as a “constructive relationship of strategic stability.”

“Beyond any single deal or agreement, I think what Xi seeks most from Trump is a willingness to continue coming to the negotiation table,” Allen Zhang, a research assistant in the Heritage Foundation’s Asian Studies Center, told the Daily Caller News Foundation. “If they can secure that, Beijing walks away with a small, but important win. It gives Xi, and also Trump, a way of managing differences and keeping underlying tensions in check. “

The U.S.-China relationship is defined by a basic contradiction: decades of trade integration left American consumers and industries deeply reliant on Chinese manufacturing and supply chains even as Washington increasingly treats Beijing as its principal long-term strategic competitor and works to reduce those dependencies, according to the White House’s National Security Strategy.

“Well, it’s no surprise that each side has serious reservations about the other — for the U.S., those concerns include whether China will cut off access to rare earths, fulfill their promise to buy American soybeans and meats, and whether Beijing will abide by the trade truce,” Zhang told the DCNF. “At the same time, the U.S. and Chinese economies are so interconnected that both parties have no choice but to come to the negotiating table.”

That tension makes maintaining stable relations with Beijing economically important even as Washington simultaneously tries to insulate critical industries and defense supply chains from Chinese leverage, according to the White House. 

“If you visit Home Depot or auto parts stores or you name it, you know that stuff still comes from China,” Ker Gibbs, former president of the American Chamber of Commerce in Shanghai, told the DCNF. “Probably 60% of our furniture still comes from China, about 80% of our toys, if you look at tools probably about 60% comes from China, so a lot of that stuff is just not gonna change.”

“China needs the continued stabilization of bilateral relations,” Yun Sun, senior fellow and co-director of the East Asia Program and director of the China Program at the Stimson Center, told the DCNF. “It wants to put a lid on the Taiwan issue, and keeps U.S. on a stable footing so it does not create disturbance. Xi wants to keep the positive and stable momentum going.”

Beijing shares Washington’s interest in reopening the Strait of Hormuz, restoring the free flow of oil and bringing greater stability to the Middle East, Chinese diplomats told Gibbs.

“On the Iran piece, my conversations with Chinese diplomats … I sort of said, ‘Look, we’re on opposite ends of that dispute,’ and they said, ‘No, we’re actually not’,” Gibbs told the DCNF. “And they pointed out that no, China actually wants the same things that the U.S. wants, meaning, open the Strait of Hormuz, open the free flow of oil and all those kinds of things, and peace and stability in the Middle East. And they’re right”

China remains heavily exposed to the Strait of Hormuz, with roughly half of its foreign crude imports passing through the waterway in 2025, equal to about 36% of its total crude supply once domestic production is included, according to CSIS ChinaPower.

Beijing has tried to cushion that vulnerability by building an estimated 900 million barrels in strategic oil reserves and expanding its refining base, which Sinopec expects to reach roughly 952 million metric tons of annual capacity in 2026, Reuters reported, citing Sinopec research.

The nearly seven-month Iran war remains unresolved, with U.S. and Iranian negotiators discussing a phased agreement that could see Tehran reopen the Strait of Hormuz in exchange for Washington lifting its economic blockade, Reuters reported, citing sources close to the talks.

The war is also creating significant political pressure for Trump at home, with 33% of Americans approving of U.S. military strikes against Iran and 62% disapproving, according to a July 24-26 Reuters/Ipsos poll. The survey of 1,248 U.S. adults, which had a margin of sampling error of plus or minus 2.96 percentage points, also found that 69% said Trump had not clearly explained the goals of U.S. military involvement in Iran.

AI is also expected to feature in the talks as Washington and Beijing compete for leadership in advanced models and chips while exploring limited guardrails around the technology. Trump said AI would be a “big topic of discussion” with Xi, while U.S. officials recently proposed a bilateral mechanism for sharing information about major AI-related security incidents, Reuters reported, citing Trump and officials familiar with the talks.

The proposed $14 billion arms sale to Taiwan is another key issue that Xi and Trump will likely discuss during their meeting.

“We have an obligation to provide for Taiwan’s defense, and we’ve never consulted with Beijing about arms sales,” Gibbs told the DCNF. “[We] never asked for permission … never given them any veto power, and so this could open up a new channel, making that literally a bargaining chip. So yeah, the people in Taiwan are watching it very closely.”

Xi is expected to press Trump to halt U.S. arms sales to Taiwan by invoking a 1982 U.S.-China communiqué that sought to manage the long-running dispute over American weapons sales to the island, Reuters reported, citing three sources familiar with discussions ahead of the summit.

Under the agreement, Washington said it did not intend to pursue a long-term policy of arms sales to Taiwan, pledged that future sales would not exceed recent levels in either quantity or quality and said it intended to gradually reduce them over time, according to the American Institute in Taiwan.

“China is less concerned about [the] capabilities that Taiwan can achieve, since China will maintain the advantage no matter what Taiwan buys. But China is concerned about the signal in U.S. commitment, especially a potential military intervention,” Sun told the DCNF. “For unification to happen, Taiwan must be convinced that US will not come to its defense.”

If the arms sale is canceled completely, the cancellation may violate the Taiwan Relations Act, passed in 1979, which mandates that the U.S. must provide Taiwan with the means to defend itself.

“China’s Taiwan strategy is to build its military capabilities, expand exercises and war games, sow dissension inside Taiwan, and weaken the US’s commitment to the island’s defenses, all as preface to Taiwan eventually agreeing to strike a political deal for some form of unification,” Scott Kennedy, senior adviser and Trustee Chair in Chinese Business & Economics at the Center for Strategic and International Studies (CSIS), told the DCNF. “Trump’s concessions in terms of language and arms sales help China implement its strategy.”

Rare earth minerals give Beijing substantial leverage on the economic side of the talks.

The United States will likely remain dependent on Chinese rare earth supplies into the 2030s despite rapidly expanding domestic mining and processing, Reuters reported, citing Benchmark Mineral Intelligence. Beijing’s biggest advantage is not simply what comes out of Chinese mines, but its control over the processing chain, with China accounting for more than 85% of global rare earth refining and production capacity, Reuters reported.

Domestic production can currently satisfy about 42% of American demand, but mined material still has to be separated, refined and converted into usable metals and magnets before it can enter weapons, automobiles, computers and other advanced technologies, Reuters reported. That refining bottleneck is what gives Beijing much of its leverage over Washington.

The effect of Beijing’s mineral leverage has already shown up in prices. After China imposed export controls on selected tungsten products in February 2025, Rotterdam prices for tungsten concentrate climbed from $266 to $551 per metric ton during the year, while ammonium paratungstate prices rose from $331 to $675, according to the U.S. Geological Survey.

China’s leverage also extends well beyond what it mines because Beijing controls enormous portions of global processing capacity. China produced roughly 45% of the world’s refined copper in 2024 despite mining only about 8% of global copper, while accounting for 63% of global copper ore and concentrate imports by value, according to the U.S. Geological Survey.

“I would begin to be listening for Xi Jinping making some kind of commitments around rare earths,” Gibbs told the DCNF. “Right now, we’re basically living month to month. We have a temporary agreement in place that China will continue supplying rare earths. That’s not a that’s not a permanent arrangement. I think most companies in the U.S. would like to see that stabilized.”

China previously agreed to address American concerns about shortages of rare earths and critical minerals including yttrium, scandium and neodymium during Trump’s May visit, according to the White House. An extension of restrictions affecting Chinese rare earth exports is among the issues hanging over the Washington talks, Reuters reported.

One expert told the DCNF that China already got what it wants from the U.S., and that this visit is more or less a victory lap for Xi.

“Xi already got what he needs most from the Trump administration,” Kennedy told the DCNF. “In October 2025 in Busan, the two sides reached a trade ceasefire, with the U.S. agreeing to cap its tariffs on China and not expand export controls on semiconductors. And in May 2026 in Beijing, the US agreed to the framework of a ‘constructive relationship of strategic stability,’ suggesting the two sides would avoid escalation and constructively manage their differences.”

However, tariffs are back on the table even after Washington and Beijing bought themselves additional negotiating time during the meeting in Busan.

The two countries agreed Wednesday to extend their trade truce until Jan. 10 after an earlier trade fight pushed reciprocal tariffs above 100%, Reuters reported, citing Treasury Secretary Scott Bessent. Bessent said the extension would provide time to pursue a broader economic agreement while Washington presses Beijing to more fully meet existing commitments.

Chinese automakers have emerged as another flashpoint ahead of the summit after Trump said he would be open to Chinese companies building vehicles in the United States if they employed American workers, Reuters reported. The prospect has alarmed major automakers and dealers, with a coalition of industry groups urging Trump not to allow Chinese companies to sell or manufacture vehicles in the U.S., The Wall Street Journal reported.

The industry has argued that heavily subsidized Chinese manufacturers could threaten American jobs while introducing national security risks through connected vehicle technology. China accounted for roughly 70% of global EV production and more than 80% of global battery cell production in 2025, according to the Alliance for Automotive Innovation, which has separately called on Congress to permanently ban Chinese connected vehicles, hardware and software from the U.S. market.

Europe offers a warning for Detroit, where Chinese automakers have already gained ground as legacy manufacturers contend with shrinking market share, factory pressure and sweeping job cuts, a trend energy writer David Blackmon described as a cautionary tale for the American auto industry in an August op-ed.

Ford CEO Jim Farley has called Chinese electric carmakers an “existential threat” and warned that their eventual entry into the U.S. market is “only a matter of time,” The Wall Street Journal reported.

“What I’ve been talking about, again, back to the Chinese diplomats, I’ve had multiple conversations with them about this. I think we should run the China model in reverse,” Gibbs told the DCNF. “So the plan that China had for Ford and GM when they entered the China market back in kind of the early 1990s, late 80s, where they required joint ventures, they required technology transfer. They required the use of Chinese labor, obviously. I believe that model was actually successful for the American OEMs. They took a lot of revenue and profit out of the Chinese market for decades, and that model could work for America.”

Despite the disputes over Taiwan, trade and critical minerals, Gibbs said the summit’s most likely top-line outcome is a renewed commitment to “constructive strategic stability,” with both sides signaling that they want to keep tensions from spiraling into a broader confrontation.

“I think that is important … we need each other, and neither of us is interested in any kind of confrontation,” Gibbs told the DCNF, adding that a more permanent rare earth agreement and increased Chinese investment in American manufacturing would be among the most meaningful concrete outcomes.