Paris Talks Test Fragile US-China Trade Truce Ahead of March Summit

US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng begin two days of talks in Paris on March 15, setting the agenda for President Trump’s March 31-April 2 Beijing summit with Xi Jinping. The meeting arrives as bilateral tensions simmer over tariffs that soared to triple digits last year before both sides climbed down, and as Trump launches new Section 301 trade probes that Beijing denounced as political manipulation.

Three Friction Points Drive the Agenda

The discussions will focus on shifting US tariffs, the flow of Chinese-produced rare earth minerals and magnets to US aerospace and semiconductor firms, and agricultural purchases. China agreed to buy 12 million metric tons of US soybeans during the 2025 marketing year and 25 million tons in 2026, and US officials have said that China has so far met its commitments under the Busan deal struck in October 2025.

But the rare earth bottleneck remains acute. While some industries are receiving rare earth exports from China, US aerospace and semiconductor firms are not and are facing worsening shortages of key materials, including yttrium, used in heat-resistant coatings for jet engines. China controls 60% of global rare earth production and 90% of their refining, and in April 2025 introduced export controls on seven heavy rare earth elements, as well as all related compounds, metals and magnets.

On Semiconductors, the picture is equally complex. Washington has deferred action on a completed Section 301 investigation into China’s semiconductor dominance, setting an initial tariff level of zero for 18 months, increasing on June 23, 2027. Meanwhile, the Bureau of Industry and Security now reviews export license applications for the Nvidia H200, AMD MI325X, and similar chips on a case-by-case basis provided certain security requirements are met—a policy shift that has drawn bipartisan congressional criticism.

Narrow Deliverables, High Stakes

US Trade Representative Jamieson Greer will join Bessent and He to map out deliverables for the leaders’ summit. Analysts expect limited breakthroughs. Deliverables have likely narrowed to commercial purchases such as soybeans rather than any grand bargain, with the two leaders expected to frame the meeting as the opening of a longer conversation set to unfold across the rest of 2026, according to CNBC.

“Both sides have a minimum goal of having a meeting, which keeps things together and avoids a rupture and re-escalation of tensions,” said Scott Kennedy, a China economics expert at the Center for Strategic and International Studies. Trump may want major Chinese commitments to order new Boeing aircraft and buy more US liquefied natural gas and soybeans, but to get that he may need to offer some concession on US export controls, per US News.

Beijing will seek clarity on the trajectory of US technology export restrictions, with Beijing essentially asking “how high the fence will get and how big the yard will be”, according to CNBC.

Fresh Irritants Cloud the Path

Days before the Paris meeting, Greer announced new trade investigations Wednesday into excess industrial capacity, targeting China and other key partners. The Section 301 probes aim to rebuild Trump’s tariff leverage after the US Supreme Court struck down Trump’s global tariffs under an emergency law as illegal, effectively reducing Trump’s tariffs on Chinese goods by 20 percentage points.

The move opens the door to new penalties like tariffs, prompting Beijing’s criticism earlier Thursday of “political manipulation”, according to AFP. As Trump’s negotiating position has been weakened by military aggression in Iran, “US needs to establish credible threat on tariffs as it remains Trump’s top pressure tool,” and the probes followed the US Supreme Court’s decision last month to curtail his ability to deploy tariffs at will.

Meanwhile, China has shown it can weaponize supply chain chokepoints. After Trump imposed tariffs in April 2025, many carmakers in the United States, Europe, and elsewhere struggled to obtain permanent magnets, with some forced to cut utilisation rates or even temporarily shut down factories when China tightened rare earth exports, according to the International Energy Agency. Even after trade volumes recovered, rare earth prices in importing countries remained elevated—with European prices reaching up to six times those in China.

What to Watch

Market relief hinges on tangible progress in Paris. Concrete licensing commitments for rare earth exports to US defense and semiconductor contractors would signal functional implementation of the Busan deal. Watch for announcements on Boeing aircraft orders or LNG purchase volumes—these would indicate China is willing to trade commercial concessions for technology restrictions relief.

Structural disputes between the United States and China—ranging across Taiwan, trade, and technology—are far too complex to resolve in a single summit, per The Diplomat. If talks produce only vague commitments, expect renewed volatility in semiconductor, aerospace, and agricultural commodity markets ahead of the Beijing summit. The deferred June 2027 semiconductor tariff remains a latent threat—and a potential bargaining chip for either side if the March summit disappoints.

Congressional pushback on AI chip exports to China is intensifying, with bipartisan legislation pending to block H200 sales regardless of executive branch licensing. That pressure will constrain what Bessent can offer He on technology controls, potentially narrowing the window for a comprehensive deal. The next two weeks will reveal whether both sides can translate tactical de-escalation into durable economic architecture—or whether the Busan truce was merely a pause in a longer decoupling.