Following U.S. President Donald Trump’s visit to China, Washington and Beijing have signaled a resumption of economic dialogue and cooperation. Kristy Hsu, Director of the Taiwan ASEAN Studies Center (TASC) at the Chung-Hua Institution for Economic Research (CIER), noted that the economic and trade arrangements of this Trump-Xi summit bear a striking resemblance to the 2020 U.S.-China Phase One trade agreement. They include expanded procurement, the establishment of trade management mechanisms, and dispute resolution frameworks. However, since the 2020 agreement ultimately failed to be effectively implemented, subsequent developments warrant close observation.
U.S. and China Resume Tariff Reductions and Procurement, Yet Export Controls Remain the Core Conflict
Director Hsu indicated that the current U.S.-China trade agenda likely encompasses increased Chinese procurement of American agricultural products, energy, and commercial aircraft, alongside the establishment of mechanisms for regular consultation and management of bilateral economic relations. Notably, the U.S. signaled a welcoming stance toward Chinese investment in non-sensitive American sectors. This marks a departure from the Trump administration’s previous policy emphasis on blocking Chinese capital from entering critical U.S. industries, making subsequent policy adjustments a key area to monitor.
Director Hsu analyzed that Trump currently faces multiple challenges, including inflationary pressures, Middle East geopolitics, and upcoming midterm elections. Domestically, backlash against high-tariff policies is also gradually mounting. On the other hand, China has aggressively diversified into non-U.S. markets in recent years to reduce its reliance on Washington, rendering tariffs and trade imbalances no longer Beijing’s most central concern.
However, Director Hsu also pointed out that while both sides have signaled cooperation and tariff reductions, there are currently no signs that the U.S. is relaxing its export controls on China. She believes that U.S. technology and export restrictions on China will be difficult to loosen in the future and may even be further tightened, continuing to be a significant source of tension between the U.S. and China.
Limited Thaw in U.S.-China Relations Continues to Implicate Taiwan’s Semiconductor Sector and Supply Chains
Regarding the impact on Taiwan, cross-strait economic and trade relations have indeed been gradually decoupling in recent years. The proportion of Taiwan’s investment and exports directed to China has declined, with many Taiwanese businesses relocating their manufacturing bases to Southeast Asia and other regions to navigate geopolitical risks and supply chain restructuring.
Nevertheless, Director Hsu cautioned that U.S. export controls apply equally to Taiwanese enterprises. In recent years, the flow of Taiwanese AI chips into China via third countries has drawn intense scrutiny from the U.S. Taiwanese firms must prioritize compliance with relevant U.S. regulations moving forward. Furthermore, if Washington subsequently adjusts its policy on Chinese investments in the U.S. or relaxes sales restrictions on high-end chips like the H200 to China, such moves will inevitably ripple through Taiwan’s semiconductor positioning and U.S.-Taiwan technological cooperation.
China’s trade surplus with the U.S. has plummeted from over $400 billion in 2018 to approximately $200 billion in 2025, whereas Taiwan’s trade surplus with the U.S. has continued to surge. Director Hsu believes that Taiwan must prudently navigate these shifts, as the economic and technological restrictions the U.S. imposes on China will not necessarily exempt Taiwan in the future.
Source: Kristy Hsu (May 15, 2026). Whether U.S.-China Trade Management Mechanisms Can Be Implemented Remains Uncertain. Economic Daily News. https://money.udn.com/money/story/5599/9505748