We do not expect the Trump-Xi meeting on May 14-15 to lead to major breakthroughs in US-China relations. We expect near-term financial market impact to remain limited.
Trump does not have the incentives nor the means to ramp up the pressure on China with focus remaining on the war in Iran and earlier court ruling still constraining his tariff weapon. For China, keeping relations on a stable track is the main priority, especially when it comes to Taiwan.
The countries could agree on China increasing purchases of US agricultural goods, an extended tariff truce and establishment of mutual trade and investment ‘boards’, though these should be seen as largely symbolical. Change in the wording of US policy on Taiwan would be a major victory for China.
