Xi’s Stabilizer Pitch Should Not Buy Him Chip Relief

The most dangerous word around the Trump-Xi summit is “stability.” It sounds soothing. It sounds like the thing markets want, diplomats promise, and presidents like to announce beside flags. But in Beijing this week, stability is not a shared principle. It is a price.

President Donald Trump is scheduled to be in Beijing on May 14 and 15 for a rescheduled summit with Chinese President Xi Jinping, a trip the White House announced after an earlier delay tied to the Iran war, according to the Associated Press¹. The meeting comes as Washington and Beijing try to keep a fragile trade truce alive while a wider risk stack builds around them: oil flows through the Strait of Hormuz, Taiwan, advanced artificial intelligence chips, rare earths, and the legal foundations of Trump’s tariff strategy.

I think Xi arrives with a real tactical opening. Trump wants a calm headline. He wants cheaper oil, steadier markets, and a summit that looks like command rather than drift. But I do not think Xi has the stronger hand in the deeper negotiation. China’s “stabilizer” pitch is powerful theater, not proof of superior leverage. Trump should extend a tariff truce only if it locks in measurable Chinese concessions, and he should not trade away core AI and semiconductor controls for promises that Beijing can reverse the moment the cameras leave.

Start with Hormuz, because that is where the illusion begins. The Trump administration has been publicly pressing Beijing to use its influence with Iran to reopen the Strait of Hormuz, the narrow waterway through which a huge share of Persian Gulf oil moves to global markets, according to AP reporting on U.S. calls for Chinese help². China has leaned into that role: Foreign Minister Wang Yi met Iranian Foreign Minister Abbas Araghchi in Beijing and called for a comprehensive ceasefire as the summit approached, according to the Associated Press³.

That gives Xi a clean story to tell. China, in this telling, is the adult in the room. Washington bombs, tariffs, and threatens; Beijing talks, cools, and stabilizes. The story has a surface plausibility because oil markets are jumpy. On May 11, oil surged more than 4 percent after Trump rejected Iran’s response to a ceasefire proposal, according to AP market coverage⁴. No American president wants to fly into a summit while traders are repricing gasoline, inflation, and war risk.

But the Hormuz card cuts both ways. China is not doing Washington a favor by wanting the strait reopened. It is protecting itself. The U.S. Energy Information Administration reported that China, India, Japan, and South Korea accounted for a combined 69 percent of crude oil and condensate flows through Hormuz in 2024, while U.S. crude imports tied to Hormuz were only about 2 percent of U.S. petroleum liquids consumption, according to the EIA⁵. That does not make the United States indifferent to an oil shock, since global oil prices still hit American consumers and financial conditions. It does mean Beijing’s “help” on Hormuz is not a scarce concession. It is a Chinese necessity dressed up as statesmanship.

The same logic applies to Taiwan. Beijing has signaled that Taiwan will be a priority at the summit and has again demanded that Washington adhere to its version of the “one China” principle, according to AP reporting from Beijing⁶. Taiwan is a self-governing democracy that China claims as its territory, and the Taiwan Strait is one of the world’s most important security and semiconductor fault lines. A quieter Chinese military posture around Taiwan would reduce market risk. It would also be restraint from pressure Beijing itself generates.

That matters because bargaining is not morality, but neither is it magic. A country can create a risk and then sell relief from that risk. Protection rackets work on that principle. The question for Trump is whether he treats temporary calm as an asset worth buying with durable concessions. On Taiwan, the answer should be no unless the restraint is specific, observable, and tied to consequences: fewer air and naval operations crossing sensitive lines, clearer crisis hotlines, and no new coercive squeeze on Taiwan’s international space. A vague promise to “lower the temperature” is not a concession. It is a mood.

Trump’s weakest spot is tariffs, and Xi knows it. The Court of International Trade ruled last week that Trump’s newest 10 percent global tariffs were illegal, though duties continue to be collected during appeal, according to Axios⁷ and the Associated Press⁸. That ruling followed an earlier Supreme Court setback to Trump’s use of emergency powers for sweeping tariffs, and Axios reported that the administration was already looking to Section 301 investigations as a fallback, a more conventional trade-law route often used against unfair trade practices.

This is a real constraint. A president whose signature tariff weapon keeps losing in court cannot threaten escalation with the same clean force. Investors understand legal risk. Importers understand refund risk. Beijing understands process. Section 301 and Section 232, the steel-and-national-security-style tariff authority, remain meaningful tools, but they are narrower and slower than a universal tariff blast. Xi’s best chance is to make a truce look easier than another legally messy escalation.

Yet weaker does not mean disarmed. China still needs access to export markets, and the American market remains large enough to matter. The U.S. Trade Representative estimated that U.S. goods trade with China totaled $414.7 billion in 2025 and that the U.S. goods deficit with China was $202.1 billion, according to USTR’s China profile⁹. The International Monetary Fund projected China’s growth would slow to 4.5 percent in 2026, citing the prolonged effects of tariffs and trade-policy uncertainty, and warned that weak domestic demand risked entrenching deflationary pressure while exports may be less able to drive growth, according to the IMF’s 2025 Article IV consultation¹⁰.

That is the part of the summit chatter I think is underweighted. China wants de-escalation too. It wants it because its consumer economy is still not strong enough to absorb every external shock, because its exporters have been carrying too much of the growth model, and because an oil shock hits China’s factory floor before it hits an American swing voter’s summer road trip.

The chip issue is where Trump must be most careful. Beijing’s most valuable prize would not be a nicer communiqué. It would be relief from U.S. controls on the high-end computing stack that feeds AI and advanced weapons systems. In December 2024, the Commerce Department’s Bureau of Industry and Security announced controls aimed at China’s ability to produce advanced-node semiconductors for AI and advanced computing, including restrictions on 24 types of semiconductor manufacturing equipment, three types of software tools, high-bandwidth memory, and 140 Entity List additions, according to BIS¹¹.

Those controls bite because they target bottlenecks, not vibes. High-bandwidth memory is the fast, stacked memory used with leading AI accelerators. Advanced chipmaking tools and design software are not easy to replace. If Xi wants licensing flexibility, delayed enforcement, or broader carve-outs, that is evidence that the U.S. still holds leverage.

There is already a precedent for bargaining at the edge of export controls. In November 2025, BIS imposed a one-year suspension of its Affiliates Rule, which would have expanded end-user controls to affiliates of listed entities, according to the Federal Register notice¹². Legal analyses at the time described the move as part of a U.S.-China exchange in which China paused several rare-earth export-control measures, according to Jones Day¹³. That precedent proves export-control implementation can be traded. It does not prove it should be traded cheaply.

The strongest case for Xi is a timing case. Trump has the more visible short clock: a summit in four days, an oil market that reacts in real time, courts narrowing his preferred tariff tools, and a political brand built around dealmaking. Xi can bundle several kinds of calm into one package: no tariff spiral, more predictable rare-earth licensing, diplomatic pressure on Iran, and a cooler Taiwan Strait. I take that seriously. In a summit, leverage often belongs to the leader who can solve several immediate problems at once.

But the bundle is less generous than it looks. Rare-earth reliability benefits Chinese suppliers as well as foreign buyers. Hormuz reopening protects China more directly than the United States. Taiwan restraint is restraint from Chinese pressure. A tariff truce helps Beijing’s export machine at a moment when the IMF says domestic demand is weak. The package is not worthless, but it is not worth core semiconductor concessions.

The right U.S. move is conditional calm: extend tariff relief where courts and markets make escalation unwise, but attach snapbacks and benchmarks. That means written timelines on rare-earth licensing, customs data that shows shipments are actually moving, cooperation on export-control circumvention, verifiable fentanyl-precursor enforcement if it is included, and specific military-to-military crisis procedures around Taiwan. On chips, the line should be bright: no easing of advanced AI accelerator, high-bandwidth memory, or leading-edge manufacturing-tool controls without concessions that are durable enough to survive the next angry press conference.

My prediction is that the summit produces a truce extension with both leaders claiming victory. The indicator to watch is not the photo-op or the communiqué. Watch the Federal Register, BIS licensing guidance, and USTR tariff notices in the 30 days after May 15. If Washington quietly extends tariff relief and loosens export-control implementation before China makes verifiable commitments on rare earths, Hormuz, and Taiwan-risk reduction, Xi will have converted the war premium into a policy win. If the relief is narrow, conditional, and snapback-backed, Trump will have done the harder thing: bought stability without selling the chokepoints that still give Washington leverage.