Trump’s Beijing trip puts trade and Iran at the center of U.S.-China talks as inflation data is expected to show pressure from the war.
President Donald Trump leaves for Beijing on Tuesday for his first state visit to China of his second term, opening high-stakes talks with President Xi Jinping as trade strains and the war with Iran put fresh pressure on both foreign policy and the U.S. economy.
The visit comes as a new inflation report is expected to offer a clearer look at how the 11-week war is feeding into consumer prices, especially through higher gasoline, jet fuel and diesel costs. The numbers could complicate Trump’s push for lower interest rates and his proposal to temporarily suspend the federal gas tax.
Trade is expected to be a major focus in Beijing. NPR reported that observers expect China to announce additional purchases of soybeans and other agricultural products, and possibly Boeing airplanes, during the trip. NPR’s Tamara Keith noted that large purchase announcements have become a familiar feature of Trump’s foreign travel, though such deals have sometimes proved less substantial than they first appeared.
The talks also come at a tense moment in the U.S.-China relationship. Experts told NPR that both governments want to stabilize ties, while a New York Times source summary described Beijing as signaling that it is prepared for a trade showdown and has been building a legal arsenal for that fight.
Iran is another likely point of friction. China and Iran are close allies and trading partners, and NPR reported there are questions about whether China has assisted Iran. The United States has spent weeks bombing Iran and is blockading ships connected to the country, according to the NPR account.
Keith told NPR that this meeting could be the first of as many as four Trump-Xi meetings this year, depending on how the talks unfold. A recent NPR/Chicago Council on Global Affairs/Ipsos poll found that many Americans view China as an economic rival seeking global dominance.
At home, the most visible economic effect of the Iran conflict has been higher gasoline prices. Trump has said he wants to temporarily suspend the federal gas tax, a step that would require an act of Congress. The current federal tax is 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel.
NPR’s Scott Horsley said airline tickets and baggage fees are also beginning to reflect significantly higher jet fuel costs. Diesel prices could eventually raise the cost of goods moved by truck or train, while the inflation report is also expected to show higher housing costs, a major part of the government’s cost-of-living index.
The inflation picture matters for the Federal Reserve as well. Trump wants the Fed to lower interest rates, but Horsley said that looks less likely under current conditions. The Fed would typically raise rates to fight inflation, he noted, but higher borrowing costs would not clear tanker traffic in the Strait of Hormuz or increase jet fuel supplies.
The next signals will come from the inflation data, any purchase agreements announced in Beijing and whether Trump and Xi show progress on trade or the Iran conflict beyond the formal optics of a state visit.
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