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What the Trump-Xi meeting means for US-China relations
In this Quick Take, Ian Bremmer weighs in on the Trump-Xi meeting in South Korea calling it “a truce, not a breakthrough.”
He explains, “It stabilizes the relationship… it brings us closer back to where we were before.” Key agreements include a one-year suspension of recent Chinese restrictions on rare earths, lowered tariffs, and renewed US soybean purchases.
But Ian notes that “there is still very much a movement longer term towards decoupling,” especially around tech.
The world’s response to America’s Revolution
Last week, I wrote about the political revolution that President Donald Trump has launched in the United States and how it has made America a fundamentally unreliable player on the world stage.
This week, I’ll take on another question I detailed during my recent “State of the World” speech in Tokyo: How can/should the rest of the world respond to this new reality?
***
When dealing with a leader of the world’s most powerful country who ignores counsel and acts on impulse, most governments will have to avoid actions that make Trump-unfriendly headlines. (Looking at you, Doug Ford.)
This is the logic that led Canada to surrender on its plan to impose a digital services tax earlier this year, and why a TV ad aired by the province of Ontario using clips of Ronald Reagan to criticize Trump’s tariffs was hastily taken down when the US president got angry. It’s why Japan was wise to make unilateral concessions on Nippon Steel and automotive tariffs. To safeguard their national interests, if a fight can be avoided, other governments should avoid it – by whatever means necessary. Let the spotlight of Trump administration hostility fall on others.
Many US allies have moved to proactively limit damage from any future fight with the White House. The United Kingdom, the European Union, and a number of Southeast Asian countries have offered non-reciprocal trade deals. See also Saudi Arabia, the UAE, Argentina, and El Salvador.
From governments that have much more bargaining leverage – like China, Russia, and India – we’ve seen that standing up for yourself and a willingness to absorb punches can create needed space. That strategy won’t work for everyone. Japan, South Korea, Mexico, Brazil and many others need to stay on a positive track with Washington.
But all countries, whatever their current relationship with the White House, will need to build their own long-term capacity and reinforce their own stability – to become more economically dynamic and competitive for the future.
That’s China’s current approach. Beijing has also doubled down on its support for existing international institutions, in part because it calculates that an American step-back will create new opportunities to change them.
In short, when faced with an America that’s become a more unreliable player on the global stage, one that can’t be counted on to safeguard allies who have underinvested in their own security, the right strategy is defense first, hedge second.
Just as Russia’s invasion of Ukraine persuaded Europeans to quickly reduce their own dependence on Russian energy, European governments want to avoid finding themselves at the mercy of shifting policies from Washington.
America’s traditional allies will have to regain their competitive position. That means a focus on growth, robust industrial policy, streamlined regulatory and bureaucratic authorities, and expansive investment in new technologies. They must attract and invest in entrepreneurship, assert more diplomatic leadership internationally, and accept responsibilities in building multilateral architecture.
Models already exist. In particular, there is Mario Draghi’s crucial competitiveness report for the European Union. On a smaller scale, there is Mark Carney’s thoughtfully crafted “Canada Strong” plan. Most every global leader should be thinking in these terms.
It’s easier said than done. The near-term politics of making these transformations is daunting. The EU is not a single state, and Europe's need for consensus rulemaking and pushback from more euro-skeptic governments (which could arrive even in France and Germany in the next election cycle) pose an enormous challenge.
There will be opposition from the fast-rising Reform Party in Britain and some provincial governments in Canada.
But once all these economic, political, security, and diplomatic investments are made, America’s unreliability, in the years well beyond Trump, will matter less.
As for hedging…
- Europe has committed to spend much more money on its own defense and to address the security coordination problems NATO will suffer without clear US leadership.
- The Saudis have signed a nuclear deal with Pakistan to hedge against any future security neglect from Washington, and there’s already more defense and intelligence-sharing among Gulf States.
- India’s Narendra Modi is working hard to stabilize his country’s relations with China and to temper their rivalry.
- The EU has finalized three free trade agreements — with South American bloc Mercosur, Mexico and Indonesia — and is working toward an agreement with India.
- Mercosur sealed a free trade deal with the European Free Trade Area, four European countries outside the EU. It has restarted negotiations with Canada.
In short, the defense and hedging strategies are well underway and likely to succeed to varying degrees in various places over time – though we should be more skeptical about even a medium-term turnaround in competitiveness.
We’re now living in a post-American order, with no one willing or able to fill the vacuum. China has its own problems and isn’t about to bite off more than it can chew. Which means a deeper G-Zero world, leading to more conflict, inflicting more damage, and lasting longer.
This trajectory isn’t sustainable. During the Cold War, it took the Cuban Missile Crisis to convince leaders that armed confrontation would be catastrophic – and that new communication channels and agreements were essential. We don't know what form “the crisis we need” to build a new order will take this time. But it's coming.
Until then? The old rules don’t apply anymore, and new rules haven’t been written yet. We must brace for sustained turbulence.
Trump-Xi meeting in South Korea
The talks come after weeks of trade escalation The US expanded export controls, which Beijing saw as a major provocation, and China responded with new rules on licensing agreements for critical minerals, a situation Ian describes as “a bit of miscommunication.”
Ian explains that the confusion was fueled by the fact that “you don’t have trusted regular engagement like you did at the end of the Biden administration,” making it easier for actions and tweets to be misinterpreted.
Still, Ian emphasizes that both sides “want to get to yes.” With the US still developing domestic rare earth production and China facing slowing growth, neither economy can afford further shocks.
Trump’s East Wing demolition, Binance pardon, and tariffs on Canada
While President Trump’s demolition of the White House East Wing dominates the headlines, Ian Bremmer says bigger stories are being overlooked.
Chief among them is Trump’s pardon of Binance founder Changpeng Zhao, whose crypto platform underpins the Trump family’s digital currency. “The fact that this stinks to high heaven is of zero concern to Trump,” Ian says. “It makes the administration look like it’s for sale.”
There’s also Trump’s new 10% tariff on Canada, in retaliation for a Reagan clip aired by Ontario in US markets. “It’s a farce,” Ian adds. “There’s clearly no national emergency here.”
Trump, Xi, and the new US–China standoff
US–China relations are once again on edge. After Washington expanded export controls on Chinese tech firms, Beijing struck back with new limits on critical minerals. President Trump responded by threatening 100% tariffs, then quickly walked them back.
Ian Bremmer says neither side wants a full trade war: “Trump doesn’t want to risk inflation or crash the markets, and Xi knows both countries have real leverage over each other.”
As Trump and Xi prepare to meet, from TikTok control to Taiwan tensions, Ian explains why “this relationship is tense, but not heading for a blow-up.”
Trump’s UN speech: Sovereignty, security, and ending wars
In this episode of "Ask Ian," Ian Bremmer analyzes President Trump's speech at the 80th Session of the UN General Assembly.
Ian notes the significant shift in tone, highlighting Trump's consolidated power compared to his first term.
The address focused on sovereignty and border security, with Trump criticizing Europe's migration policies. Ian notes that Trump's critique has fueled "anti-establishment populism across Europe."
Trump’s desire to end global conflicts, from Russia-Ukraine to Israel-Palestine, was also prominent. Trump emphasized that the US would “not put boots on the ground."
Ian also discusses Trump's consideration of tariffs on nations supporting Russia, underscoring the evolving landscape of US foreign policy.
U.S. President Donald Trump shakes hands with European Commission President Ursula von der Leyen, after an announcement of a trade deal between the U.S. and EU, in Turnberry, Scotland, Britain, July 27, 2025.
HARD NUMBERS: Trump pitches Europe on joint tariffs, Mexico nabs uniformed diesel smugglers, Hong Kong lawmakers veto same-sex bill, Apple holds prices steady
14: Mexican authorities have detained 14 people, including several active duty Marines, for smuggling diesel fuel into the country from the United States. The scandal could put further pressure on an already-strained relationship between the US and Mexico, key allies in Washington’s “War on Drugs.”
71: Hong Kong’s legislature vetoed a government-backed bill that would have granted some additional marital rights to same-sex couples registered overseas. Seventy-one lawmakers voted against the bill, with 14 in favor.
5.6: Apple on Wednesday introduced a new, slimmer iPhone “Air” model which is just 5.6mm thick. But the fatter news from the event is that the company has decided not to increase prices for iPhones, despite the impact of new US tariffs, which are currently costing the tech giant more than $1 billion per quarter.
Graphic Truth: What’s behind the US inflation numbers?
US prices rose 2.7% over the 12 months until July 2025, a relatively steady rate despite the onset of President Donald Trump’s tariffs. But what’s behind this inflation figure? This Graphic Truth explores how the prices of various categories of consumer goods are changing.