Chinese Yuan Gains as Trump-Xi Talks Draw Focus

Key Moments

Yuan Strengthens Ahead of Critical Diplomatic Engagement

USD/CNH continued to weaken in Thursday’s Asian session, prolonging a downtrend that started on April 30. The pair fell to a 39-month low of 6.7815 and was recently trading around 6.7850. Market participants remained cautious as a closely watched summit between U.S. President Donald Trump and Chinese President Xi Jinping got underway in Beijing.

Leaders Signal Willingness to Stabilize Relations

At the opening of the meeting, President Xi underscored the importance of cooperation between the two countries, stating that the success of each represented shared opportunities and that a stable bilateral relationship was vital for global security. President Trump responded with an upbeat tone, saying he believed the relationship would become “better than ever before.”

Potential “Board of Trade” and Focus Areas of the Summit

As the two largest global economies moved to ease tensions, they were reportedly exploring the creation of a “Board of Trade” mechanism designed to lower tariffs on approximately $30 billion of non-sensitive goods. The agenda was also expected to include several sensitive and strategically important topics: the Iran war, trade imbalances, developments in artificial intelligence, and the status of Taiwan.

The summit, which had been postponed for weeks amid friction related to the conflict in the Middle East, drew intense scrutiny from global investors seeking signs of a breakthrough or de-escalation. Trump was expected to press Beijing to use its leverage with Tehran to help reopen the Strait of Hormuz, although he has publicly played down the Iran conflict as the central theme of the talks.

Background: Understanding the U.S.-China Trade War

The article also outlined key concepts related to the ongoing trade dispute between the United States and China.

What is a Trade War?

A trade war is described as an economic confrontation between two or more countries that arises from severe protectionist policies on one side. It involves the introduction of trade barriers, such as tariffs, which trigger retaliatory measures. These tit-for-tat barriers increase import costs and, in turn, raise the overall cost of living.

Origins of the U.S.-China Trade Conflict

The conflict between the United States and China began in early 2018, when President Donald Trump implemented trade restrictions on China, citing what he saw as unfair trade practices and intellectual property theft. China responded by placing tariffs on several U.S. products, including automobiles and soybeans. The dispute escalated until the two governments signed the U.S.-China Phase One trade agreement in January 2020.

The Phase One deal called for structural reforms and other changes to China’s economic and trade framework, with the stated goal of restoring stability and confidence in the relationship. The emergence of the Coronavirus pandemic, however, diverted attention away from the dispute. The article noted that President Joe Biden, who succeeded Trump, maintained the existing tariffs and introduced some additional measures.

Trade War 2.0 Under a New Trump Term

The return of Donald Trump to the White House as the 47th U.S. President has renewed frictions between Washington and Beijing. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China upon his return to office, a policy he implemented on January 20, 2025.

With Trump back in power, the U.S.-China trade confrontation has been described as resuming from where it left off, with reciprocal measures again influencing the global economy. According to the article, these policies have contributed to disruptions in global supply chains, a decline in spending – particularly in investment – and upward pressure on Consumer Price Index inflation.