By Karim Were
The United States and China are heading into a potentially consequential new phase of economic and technological competition as President Donald Trump and Chinese President Xi Jinping prepare for talks in Washington on September 24, with trade, technology and artificial intelligence expected to feature prominently on the agenda.
The planned meeting comes despite efforts by both governments to prevent their rivalry from developing into a broader economic rupture. Washington and Beijing have established mechanisms intended to manage bilateral trade, while disagreements over advanced semiconductors, artificial intelligence
The relationship has therefore entered a delicate period of managed competition: the two countries continue to trade and negotiate, but increasingly treat key technologies and supply chains as matters of national security.
Trade remains at the centre of the relationship
For decades, the United States and China developed one of the world’s most important economic relationships. American consumers and companies became deeply connected to Chinese manufacturing, while China benefited from access to the huge US market, investment and technology.
That relationship has become increasingly contentious.
The Trump administration has used tariffs and other trade measures to pressure Beijing over what Washington considers unfair trade practices, market imbalances and economic policies that disadvantage American businesses.
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The United States Trade Representative has maintained a broad framework of Section 301 tariffs targeting Chinese trade practices involving technology transfer, intellectual property and innovation. A second four-year review of those tariff actions was initiated in May 2026.
At the same time, Washington has been attempting to create a more structured mechanism for managing the relationship rather than allowing tariff disputes to escalate without negotiation.
In June, the USTR announced plans for a U.S.-China Board of Trade, designed to manage bilateral trade on an ongoing basis and explore possible tariff modifications for selected non-sensitive products.
US Trade Representative Jamieson Greer said the mechanism was intended to promote a more balanced relationship while continuing to use tariffs to defend American economic and national-security interests.
The development illustrates the contradictory nature of the relationship: Washington wants greater economic reciprocity while also seeking to preserve restrictions on technologies it considers strategically sensitive.
Technology becomes a security issue
The most difficult part of the US-China relationship may no longer be conventional trade.
It is increasingly the battle over technology.
Semiconductors, artificial intelligence, advanced computing equipment, telecommunications and other high-tech industries have become central to the competition between the world’s two largest economies.
Washington has imposed restrictions on China’s access to some advanced semiconductor technologies, arguing that highly capable computing systems can have military as well as commercial applications.
Beijing has strongly opposed such measures, arguing that Washington is using national-security arguments to restrict China’s technological development.
The dispute has expanded into artificial intelligence.
According to Reuters, AI is expected to be a major issue during the Trump-Xi meeting, with disagreements over advanced chip access, alleged technology copying and the regulation of artificial intelligence.
The two governments also disagree over how AI risks should be addressed.
The United States has focused heavily on the risks posed by increasingly powerful AI systems, including their potential use in security and military applications. China, meanwhile, has placed greater emphasis on cybersecurity, information control and political stability.
That divergence could make international cooperation on AI standards difficult even when both countries recognize that uncontrolled technological competition carries risks.
Beijing rejects US allegations over AI technology
The dispute intensified this month after US authorities accused Chinese artificial-intelligence companies of using large-scale “distillation” techniques to obtain capabilities associated with American AI models.
China rejected the accusation.
In a September 9 statement, China’s Ministry of Commerce said the US allegations were unsupported and accused Washington of politicising an ordinary technological and commercial practice. Beijing argued that model distillation is a widely used technique in the AI industry.
The disagreement highlights a wider problem.
As AI becomes increasingly important to economic competitiveness and national security, ordinary commercial activities can increasingly be interpreted through a strategic lens.
For Washington, preventing rivals from obtaining cutting-edge capabilities is increasingly linked to national security.
For Beijing, restrictions on access to advanced computing technology can be seen as attempts to contain China’s rise as a technological power.
Critical minerals add another layer of tension
Technology competition is also affecting raw materials.
Modern electronics, electric vehicles, batteries, renewable-energy systems and advanced military equipment depend on a range of critical minerals and processing capabilities.
China occupies an important position in several parts of these supply chains, giving Beijing significant economic leverage.
The Trump administration has therefore made access to critical minerals an important part of negotiations with Beijing.
During Trump’s May visit to China, the White House said the two sides reached understandings concerning rare earths and other critical minerals, including materials such as yttrium, scandium, neodymium and indium. Washington said China would also address restrictions affecting rare-earth production and processing equipment and technologies.
China has also demonstrated that it is prepared to use export controls in strategic sectors.
In August, Beijing announced stricter case-by-case review of exports to the United States involving certain drone-related dual-use items, components and technologies covered by China’s export-control framework.
Such measures underscore the increasingly reciprocal nature of the restrictions.
The United States controls access to certain advanced technologies, while China can use its position in strategic supply chains to influence access to important materials and components.
A fragile effort to prevent escalation
Despite the rivalry, neither Washington nor Beijing appears to be seeking an uncontrolled collapse in economic relations.
The May 2026 Trump-Xi agreement established new US-China Boards of Trade and Investment, according to the White House, with the stated goal of providing mechanisms for managing economic and investment issues.
The White House also said China had committed to purchases of American agricultural products and an initial purchase of 200 Boeing aircraft, while addressing US concerns over rare-earth supplies.
These commitments provide areas where cooperation remains possible.
Agriculture, aviation, energy, consumer goods and other non-sensitive sectors could potentially offer both countries economic incentives to keep negotiations alive.
However, technology presents a different challenge because it is increasingly connected to military capabilities and national security.
This means that the two governments may be able to reach agreements on agricultural purchases or aircraft while continuing to disagree fundamentally over advanced computing and AI.
Why the September summit matters
Trump and Xi’s September 24 meeting comes at a particularly sensitive moment.
Reuters reported that the two leaders are expected to discuss extending the tariff truce, Chinese purchases of US goods, technology restrictions and critical minerals. Other issues, including Taiwan, Iran and fentanyl precursor shipments, are also expected to feature in the discussions.
For Trump, an agreement that provides greater access for American businesses and farmers could strengthen his domestic economic agenda.
For Xi, easing technology restrictions and preserving access to major export markets would help China manage external economic pressures while continuing to develop its domestic technology industry.
The negotiations therefore involve more than simply reducing tariffs.
They concern the future structure of economic relations between the world’s two largest economies.
The global economy is watching
The consequences of US-China competition extend well beyond Washington and Beijing.
Companies across Asia, Europe, Africa and Latin America rely on supply chains that involve Chinese manufacturing, American technology or both.
When tariffs increase, companies may shift production to other countries. When technology restrictions tighten, businesses may need to find alternative suppliers. When China restricts critical-mineral exports, manufacturers elsewhere can face higher costs or shortages.
The result is a gradual restructuring of global supply chains.
Some companies have already pursued strategies designed to reduce dependence on either country by expanding manufacturing and sourcing in other markets.
For developing economies, the changes could present both risks and opportunities.
Countries capable of attracting manufacturers seeking alternative production bases could benefit from investment. But countries dependent on imported machinery, electronics or industrial inputs could face higher costs.
The impact is particularly important for emerging economies seeking to industrialise while maintaining commercial relationships with both Washington and Beijing.
Technology competition could reshape the next decade
The US-China rivalry is also likely to influence the future direction of the global technology industry.
Semiconductors are at the centre of modern computing, AI systems, telecommunications and defence technologies. Control over advanced chips and the equipment used to manufacture them has therefore become a strategic priority.
The United States wants to maintain its technological advantage while preventing sensitive capabilities from strengthening China’s military and strategic position.
China, meanwhile, is investing heavily in domestic semiconductor manufacturing and AI development in an effort to reduce dependence on American technology.
The result is a race for technological self-reliance.
That race could produce significant innovation, but it could also make the global technology ecosystem more fragmented.
Instead of one interconnected market built around common technologies and supply chains, the world could increasingly develop competing technology ecosystems centred on the United States and China.
Businesses face an uncertain environment
For multinational companies, the biggest challenge is uncertainty.
A company may be able to operate profitably under a particular tariff regime, only to face new restrictions months later.
Similarly, technology companies must consider whether products, software or components can legally be sold across borders as governments expand export-control systems.
The uncertainty has encouraged businesses to diversify supply chains and reconsider long-term investment decisions.
At the same time, completely separating the two economies would be extremely difficult and costly.
The scale of US-China commercial ties means that a complete economic decoupling would affect manufacturers, consumers and businesses in both countries.
That is why the emerging model appears less like complete separation and more like selective disengagement from strategically sensitive sectors.
A rivalry with global consequences
The US-China relationship is no longer simply a dispute over trade deficits.
It has evolved into a broader contest over economic influence, technological leadership, supply-chain security and national power.
Both governments continue to recognize the economic benefits of cooperation, yet neither appears willing to abandon its strategic priorities.
The September 24 Trump-Xi meeting could therefore produce agreements that reduce immediate tensions without resolving the deeper rivalry.
A successful outcome could provide businesses with greater certainty, stabilize trade and reduce the risk of sudden escalation.
But even if the two leaders reach new agreements, competition over artificial intelligence, semiconductors, critical minerals and advanced technology is likely to continue.
The broader question is whether Washington and Beijing can develop rules for managing that competition without allowing it to destabilize the global economy.
For countries outside the US-China rivalry, the answer will matter enormously. Their economies are increasingly connected to both powers, leaving governments and businesses with a difficult balancing act: benefiting from trade with the world’s two largest economies while preparing for a global economic system in which technology and national security are becoming increasingly intertwined.
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