US and China discuss tariff cuts ahead of Trump-Xi summit

The United States and China are reportedly in talks to reduce tariffs as a prelude to the upcoming summit between U.S. President Donald J. Trump and Chinese President Xi Jinping. This development is set against the backdrop of ongoing trade negotiations aimed at easing tensions between the two economic powerhouses. The temporary trade truce currently in place has prevented major tariff escalations, focusing discussions on reducing tariffs on certain goods totaling around $30 billion. The talks come as both nations continue to navigate a complex web of strategic issues, including technology and rare earths, indicating that while there is movement towards de-escalation, a comprehensive resolution is not yet in sight. Key Takeaways Markets suggest that the discussion of tariff cuts appears to increase the likelihood of a potential visit by Xi Jinping to the U.S. before 2027. Pricing in the market for Xi Jinping’s U.S. visit before December 31, 2026, reflects a strong 94.8% YES probability, consistent with the recent developments. The ongoing talks may indicate a thawing of relations, but the broader U.S.-China competition remains a significant undercurrent. What to Watch Observers wil...