The U.S.-China Summit: Too Big and Too Small to Fail

Center for Strategic and International Studies | Scott Kennedy

President Donald Trump and Chinese leader Xi Jinping will convene next week for their second bilateral summit of the year to stabilize relations amid mounting domestic economic pressures. Both leaders seek a superficial calm to protect their respective political positions ahead of the U.S. midterm elections and China's 21st Party Congress in 2027.

This diplomatic effort reflects a mutual desire to avoid a bilateral crisis while managing deep structural vulnerabilities. Consequently, the leaders are expected to extend their commercial ceasefire, maintaining tariff caps from the October 2025 Busan meeting and securing U.S. access to Chinese rare earths. However, expectations remain low. The summit will yield only modest agreements, including tariff reductions on $30 billion of exports and limited purchases of Boeing aircraft. Ultimately, this transactional approach fails to address systemic global challenges, leaving Beijing to quietly advance its influence through the Shanghai Cooperation Organisation.

Comment

The temporary extension of the Busan tariff caps and the resumed flow of Chinese rare earths exposes the persistent vulnerability of Western defence industrial supply chains. Beijing's control over critical mineral processing remains a powerful leverage point, directly affecting the production of advanced military platforms like the F-35 Lightning II. This tactical respite does not resolve the underlying structural deficit in North American processing capabilities.

Consequently, the Pentagon's efforts to build resilient, non-Chinese supply chains through initiatives like the Defense Production Act Title III will face continued delays. This prolonged dependency limits the rate at which the US Navy can stockpile Raytheon-produced Tomahawk cruise missiles. Ultimately, the temporary rare earth flow merely defers the inevitable friction of decoupling, leaving the production lines of the Lockheed Martin facility in Fort Worth vulnerable to future export restrictions.

Strategic Question for Discussion

If Beijing maintains its leverage over critical mineral processing, how will the Pentagon's Defense Production Act Title III initiatives successfully transition Western defence manufacturing away from Chinese dependencies?

The trajectory indicates that Defense Production Act Title III funding will remain insufficient to offset China's near-monopoly on heavy rare earth separation in the near term. Instead, the Pentagon will likely have to rely on strategic stockpiling and bilateral processing agreements with allies like Australia to mitigate immediate disruptions. This approach suggests that true supply chain independence for critical platforms remains a long-term objective rather than an imminent reality.

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