Trump‑Xi summit watch

Markets are watching a possible May meeting between Donald Trump and Xi Jinping because the old idea of a U.S.-China trade truce no longer fits the facts. Trump is due to visit China in May, his first trip there in eight years, after both sides spent the past year piling on tariffs, probes, and threats. The summit matters because investors still remember the days when one phone call could move the whole trade relationship. This time, the relationship has already changed shape. China is not waiting for Washington to reopen the old lanes. That shift started with tariffs, but it did not end there. The Trump administration’s trade fight broadened in March, when the U.S. Trade Representative opened new Section 301 investigations into structural excess capacity in manufacturing and into forced labor practices. Those probes sit on top of older China tariffs rather than replacing them. They signal something more durable than a bargaining tactic. Washington is no longer just trying to win concessions. It is trying to press on the structure of Chinese industry itself. That pressure did hit direct trade. U.S. imports from China weakened sharply after the 2025 tariff shock. But the more surprising fact is what happened next. China’s overall exports held up because trade did not vanish. It moved. New data from Global Trade Alert estimates that about $150 billion of Chinese exports were redirected away from the U.S. market in 2025. Most of that flow went to ASEAN, Sub-Saharan Africa, Latin America and the Caribbean, and Gulf markets. Europe and Japan did not absorb the shock in the same way. That is why a Trump-Xi summit could calm markets without restoring the old economic order. The tariff war no longer points only at one bilateral number, like the U.S. trade deficit with China. It has pushed firms to rebuild routes, suppliers, and customer bases across the global South. The European Central Bank says Chinese exports outside the United States showed broad-based growth even as shipments to the U.S. fell, and its early analysis finds only limited diversion into third markets at the aggregate level. In other words, some trade was rerouted, some was reallocated, and some supply chains were redesigned. The result is resilience, not reconciliation. That distinction matters because markets still tend to price every U.S.-China diplomatic thaw as if the 2010s could come back. They probably cannot. Even if Trump and Xi produce a photo, a statement, and a pause in escalation, the machinery now driving the relationship is harder to reverse. Tariffs remain embedded in U.S. customs schedules. Section 301 cases are still moving. Chinese exporters have already spent a year learning how to sell more into Southeast Asia, Africa, and Latin America. Once companies do that work, they do not unwind it because two presidents shake hands. So the summit watch is really a volatility watch. A meeting can reduce the odds of a fresh shock. It can reassure companies that neither side wants a sudden rupture. It can buy time for negotiators. What it probably cannot do is rebuild the dense dependence that used to define U.S.-China trade. The clearest sign is not in Washington or Beijing. It is in the map of where Chinese goods are going now.