By most accounts, the outcome of the 90-minute meeting between U.S. President Donald Trump and Chinese President Xi Jinping in October was little more than a one-year truce in the trade war, rolling tariffs back to Jan. 19 levels, though final details are still being sorted out; a rare Xi-initiated phone call to Trump on Nov. 24 underscored his desire to implement the deal (while also raising the Taiwan issue). But what if the Washington cognoscenti and much of the press have it wrong? What if the meeting signaled the beginning of a new phase in U.S.-China relations?
Why? One metric I use to gauge U.S.-China relations is the five stages of grief—traditionally framed as denial, anger, bargaining, depression, and acceptance. After passing through the first two, Washington is hitting the third. These have unfolded in direct proportion to China’s emergence on the modern world stage, as its GDP grew from $310 billion in 1985 to $18.8 trillion in 2024 and it moved up the ladder of civilian and military technology to challenge U.S. global primacy.
For too long, the United States was in denial, assuming that China’s economic reforms and opening would lead to the political liberalization seen in South Korea and Taiwan—or refusing to believe that China could ever get its act together enough to challenge the United States. Then, toward the end of the Obama years and fully under Trump, as the “China shock” reverberated, the consensus moved into the second stage: anger. China became utterly toxic in Washington; the Blob-acceptable debate was how best to compete, contain, and prepare for war.
The Trump-Xi meeting suggests that the United States is moving beyond mere anger toward managing differences, but defining the terms of competition remain problematic.
Perhaps Trump’s success in coercing most other U.S. allies and partners into making extraordinary trade concessions led the administration to overestimate its leverage and underestimate how well-prepared China was for Trump 2.0.
Beijing has been steadily decoupling, trying to achieve autonomous supply chains and insulate its economy from the United States. Even this year, exports are up globally but were down 27 percent with the United States in September alone. Foreign direct investment is down similarly. Beijing has stepped up efforts to reduce the role of the dollar, and a growing share of its trade in goods and services is done in the yuan—more than 30 percent—facilitating developing nations to convert foreign debt to yuan and pushing “panda bonds.” Trump’s crusade against clean energy and electric vehicles is ceding global dominance of renewables and autos to Beijing.
Beijing’s growing sense of power and Trump’s tacit acknowledgement of it were evident. China demonstrated its escalation dominance with the United States, threatening to halt rare-earth exports as well as other critical minerals and inflicting economic pain and boycotting U.S. soybeans. Trump seemed to grasp that the United States had underestimated China.
Having studied the trajectory of U.S.-China ties over the past four decades, I discern some subtle changes—new body language, a new sobriety, and tacit new assumptions that will not sit well with the China hawks who were troubled by Trump’s quest for a deal. We’re entering the third phase of grief: bargaining.
The Trump-Xi summit exhibited more of a sense that the United States was treating China as a peer, showing a rare desire for stability. Seeming to reflect the reality that four decades of accumulated interdependence can’t be undone overnight, U.S. Treasury Secretary Scott Bessent said in October that the U.S. goal was “not to decouple; it’s to derisk.” Trump said on scale of 1-10, the meeting with Xi “was a 12.” This tracked with Xi’s goal of stability and predictability, as he emphasized during the meeting:
China-U.S. relations have remained stable on the whole. China and the United States should be partners and friends. This is what history has taught us and what reality needs. … You and I are at the helm of China-U.S. relations. In the face of winds, waves, and challenges, we should stay the right course, navigate through the complex landscape, and ensure the steady sailing forward of the giant ship of China-U.S. relations.
Assessing what Trump and Xi actually agreed to bears this out. The United States suspended the 10 percent tariffs added for China’s fentanyl precursor chemical exports, and FBI Director Kash Patel says China is cooperating on steps to stop exports of fentanyl precursor chemicals.
Trump also agreed to suspend heightened reciprocal tariffs; suspended the addition of dozens of Chinese companies that the Commerce Department had added to its Entity List, which limits exports of U.S. technology on national security grounds, for a year; suspended maritime fees charged to Chinese ships in U.S. ports for a year; and extended the exclusion of Section 301 tariffs for a year. All told, Trump lowered average tariffs to China to around 45 percent—less than those on India or Brazil.
For its part, China suspended global implementation of its comprehensive new export controls (which mirrored U.S. controls) on rare-earth minerals for a year and pledged to issue general licenses to the United States for the export of gallium, germanium, antimony, and graphite, removing controls announced in 2023.
Beijing will also purchase agreed amounts of soybeans, end retaliatory tariffs on other U.S. agricultural products, allow Nexperia to resume export of legacy chips made in China, and stop targeting U.S. firms for antitrust investigations. In sum, Xi’s coercive threats and action got China most of its desired response.
It is, of course, a fragile truce, and one Trump tweet, one Chinese military provocation in the South China Sea, or one U.S. gesture toward Taiwan could blow everything up. It’s easy to backslide to anger, especially with a volatile president and a cocky, overreaching China.
And the underlying structural tensions—predatory mercantilism, steeply subsidized overcapacity, geo-technology, and political-military competition—continue to drive strategic rivalry. Artificial intelligence appears the centerpiece of strategic rivalry, with two very different models on offer. U.S. major tech firms are in a quest for the holy grail of artificial general intelligence, while China offers a more practical, open-source model, appealing to the global south.
But perhaps the biggest takeaway of the meeting was a mutual commitment to a continuing process of dialogue to manage implementation of the deal and, more broadly, the bilateral relationship. There was agreement on an exchange of summits, with Trump going to Beijing next spring followed by Xi coming to the United States. In this vein, U.S. Defense Secretary Pete Hegseth’s meeting with Chinese Defense Minister Dong Jun in Kuala Lumpur in October and the discussion of reestablishing military-to-military communications and perhaps ongoing relations—though Beijing will try to set conditions—appeared to round out this new phase.
Where does it lead? These developments appear a significant step toward managing competition, perhaps starting to define the terms of what has seemed an unbounded contest. Two big issues did not come up at the Trump-Xi meeting—Beijing did not raise the Taiwan issue, and Trump didn’t discuss the possible export to China of a scaled-down version of Nvidia’s new Blackwell AI chip. Xi is hoping for stronger reassurance that the United States won’t support Taiwan’s independence; Nvidia CEO Jensen Huang is lobbying his pal Trump for the China market—and Beijing is already facing chip shortages.
Nuclear weapons are also potentially on the table. Trump said recently that he was working on a plan for denuclearization with Russia and then China. Trump, of the Cold War generation, seems to have a healthy fear of nuclear weapons. Russian President Vladimir Putin, who in 2023 suspended his country’s participation in New START—a treaty that limits both sides to 1,550 deployed warheads and expires next February—has offered to extend it.
China, which has doubled its nuclear arsenal to about 600, appears on a march toward parity with the United States and is projected to have 1,000 nuclear warheads by 2030 and appears to be planning for new nuclear tests. Beijing rejected talks on nuclear weapons sought by former U.S. President Joe Biden—but new issues such as AI and the question of human control of nuclear weapons might open the possibility of dialogue.
All of the above reinforces the idea that we have moved to bargaining, the third stage of grief. The hawks who seek to tighten the screws on China, rapidly decouple, and confront Beijing are, for the moment, on the back foot. Of course, the fundamental contradictions and a deep chasm of distrust have not melted away, strategic competition remains fierce, and the Taiwan question continues to boil.
There’s also a potential willingness to talk on the China side, where the latest economic figures point to a nation stuck in the mud for now and keen for a lifeline. Xi’s overreach, evident at the recent Fourth Plenum—where he doubled down on advanced, heavily subsidized manufacturing while speechifying about multilateralism and free trade—will rankle not just the United States but much of the global south.
Beijing may realize that it overplayed its hand when it flaunted its dominance of critical minerals with its micromanaging of new export controls that threatened to hold the world hostage on all electronics—phones, laptops, auto manufacturers, and much else. China didn’t seem to grasp that it was freaking out the whole world. The U.S. deal may presage a stepping back.
That means depression, the fourth stage of grief, is still some way off. It may take a true catastrophe to trigger it—or a feeling of a real loss to China in a scientific or military conflict.
The final stage of grief, acceptance, still seems well over the horizon. Neither side yet fully accepts the legitimacy of the other. In the Cold War, it took the existential threat of the Cuban missile crisis and other near-death experiences before the United States and Soviet Union grudgingly accepted the balance of power and the possibility of a relatively peaceful coexistence.
On balance, however, I suspect the Trump-Xi meeting reflects an evolution of the bilateral relationship. The United States may be coming to terms with the reality of its predicament, and China may be beginning to grasp both its strengths and the limits of its situation. Whether it reverts back to the mean or if its momentum pulls the bilateral relationship toward a stable equilibrium is anyone’s guess.