The White House has a problem. It believes China is cheating on the trade truce the two countries struck last year in South Korea. But instead of calling it out, President Trump's team is choosing to stay silent.
The reason boils down to timing.
There is also a deeper fear: if the U.S. pushes too hard, China might respond by completely halting the supply of critical minerals and rare earths - materials the U.S. needs for everything from phone screens to military equipment.
The Busan summit in 2025 marked a temporary truce in a prolonged trade war that had escalated under Trump's first term. Under the agreement, China pledged to increase purchases of U.S. goods and address intellectual property concerns, while the U.S. rolled back some tariffs. However, critics argue the deal lacked enforcement mechanisms, leaving Washington with limited leverage as Beijing continued its industrial policies.
Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer have engaged in roughly a half‑dozen talks with Chinese officials over the last twelve months. But those private conversations are not resolving the core issue. Wendy Cutler, a former U.S. trade negotiator now at the Asia Society Policy Institute, put it bluntly: "We disarmed ourselves in that truce. And now our options for action are sharply constrained."
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There is also a concern that Beijing might view Washington's muted response to its actions as evidence that Trump is not prepared to engage in a protracted trade struggle, especially given the Iran war's impact on energy costs.
The list of Chinese moves since the Busan deal is growing. In April 2026, Beijing announced new supply-chain regulations that tighten control over critical materials. Then, late last month (June 2026), China placed trade curbs on dozens of U.S. firms.
The Pentagon also updated its list of entities it says are aiding China's military in June. That list now includes some big names: Chinese e-commerce giant Alibaba (stock price 117.75), AI search company Baidu (111.10), and carmaker BYD. These are not small players. They are companies with global reach and U.S. connections.
Meanwhile, Applied Materials, a U.S. company that makes chip-manufacturing equipment (stock price 573.58), sent executives to Beijing to talk about material access. So did Coherent Corp., a manufacturer of optical transceivers - a crucial component in data centers.
Derek Scissors, a China-focused scholar at the American Enterprise Institute, expressed doubts about the administration's approach: "It's not clear why President Trump wants to keep seeing Xi Jinping. Each meeting puts more distance between where President Trump started on China and where he's ending up."
The September summit is the next big date. Trump and Xi are scheduled to sit down, and the U.S. side plans to raise the mineral access problem directly. Some U.S. officials worry that Beijing will see Washington's reluctance to act as a green light to ask for more.
For investors, the situation creates uncertainty in a few key areas. Stocks tied to Chinese companies on the Pentagon list - like Alibaba and Baidu - have already seen their prices bounce around. Companies that depend on Chinese materials, like Applied Materials and Coherent, face supply questions that are not going away.
The Chinese Embassy in Washington, through spokesperson Liu Chang, said both sides need to "inject more stability into bilateral economic and trade cooperation and the world economy." That sounds nice. But behind the scenes, the U.S. is essentially running out the clock, hoping the summit fixes what quiet meetings could not.
The bottom line: The trade truce bought time, not trust. If you own stocks in companies with heavy exposure to Chinese supply chains or U.S.-China trade tensions, the September meeting is worth watching. Markets hate unpredictability. And right now, the biggest unknown is whether either side will blink.
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