Chinese Yuan reaches three-month highs as Trump-Xi meeting begins

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USD/CNH continues its losing streak that began on April 30, reached a 39-month low of 6.7815, and is now trading around 6.7850 during the Asian hours on Thursday. Traders adopted a cautious stance as the high-stakes summit between Presidents Donald Trump and Xi Jinping began in Beijing.

USD/CNH reached a 39-month low of 6.7815 on Thursday.
Traders adopt caution amid ongoing Trump-Xi meeting in Beijing.
The US and China may utilize a "Board of Trade" framework to cut tariffs on $30 billion of non-sensitive goods.

President Xi opened the meeting by emphasizing that the success of both nations represents mutual opportunities and that a stable relationship is essential for global security. Trump, in turn, expressed optimism, stating he believed the relationship would become “better than ever before.”

As the world’s two largest economies seek to stabilize their ties, they are reportedly considering a "Board of Trade" framework to reduce tariffs on roughly $30 billion worth of non-sensitive goods. The discussions are also expected to address a range of critical issues, including the Iran war, trade imbalances, artificial intelligence, and the status of Taiwan.

The US-China summit, which was delayed for weeks due to tensions surrounding the conflict in the Middle East, is being closely monitored by global markets for signs of a diplomatic breakthrough. Trump is expected to urge Beijing to leverage its influence with Tehran to help reopen the Strait of Hormuz, though he has publicly downplayed the Iran conflict as the primary focus of the talks.

US-China Trade War FAQs

What does “trade war” mean?

Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.

What is the US-China trade war?

An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.

Trade war 2.0

The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.