Trump's China Visit and the New Trade Landscape: What Aussie Investors Need to Know | Week Ending 9 May 2026

The US–China trade relationship in May 2026 looks nothing like it did 12 months ago — and it's moving again. With US President Donald Trump scheduled to visit China on 14–15 May 2026 for his first trip to Beijing in eight years, investors are watching closely. This isn't just a diplomatic photo op. It's a critical inflection point for global trade, and Australian investors have more skin in this game than most realise.

Here's the full picture — where things stand, how we got here, and what to watch as Trump and Xi sit down next week.

What Actually Happened: From Tariff War to Uneasy Truce

To understand May 2026, you need to start at the beginning.

In early 2025, the Trump administration launched an aggressive tariff campaign against China, initially targeting a range of goods and escalating rapidly. By mid-2025, US tariffs on Chinese imports had climbed to 145% — effectively a near-total trade embargo on many product categories. China retaliated with 125% tariffs on US goods.

The result was economic disruption on both sides: supply chains were rerouted, inflation risks crept up in the US, and Chinese exports to American markets cratered. Global markets sold off hard.

Then, in May 2025, negotiators from both sides met in Geneva and struck a 90-day tariff truce. The headline terms: US tariffs on Chinese goods dropped from 145% to 30%, Chinese tariffs on US goods eased substantially. Markets rallied sharply on the news.

But the truce was fragile. Within weeks, Trump accused China of violating the deal — specifically, of backtracking on commitments to roll back export curbs on critical minerals. China, in turn, accused the US of introducing "discriminatory restrictive measures" that violated the spirit of the agreement.

Through the back half of 2025, tariffs were gradually renegotiated through a series of 90-day pause extensions (May and August 2025) that steadily walked back the peak escalatory rates. Then, on 30 October 2025, Trump and Xi met in person on the sidelines of the APEC summit in Busan, South Korea — the first in-person Trump–Xi summit of Trump's second term. The Busan Summit produced a one-year trade truce.

The key tariff move: the US cut the additional "fentanyl-related" tariffs on Chinese goods from 20% to 10% (effective 10 November 2025), bringing average US tariffs on Chinese imports down from ~57% to ~47%. Further tariff escalations were suspended under the truce framework. Not a clean resolution, but a meaningful and sustained de-escalation.

The current state, as of May 2026: tariffs on both sides remain elevated but well below the 2025 peak. The relationship is described by Chinese Foreign Minister Wang Yi — following a meeting with a US congressional delegation on 7 May 2026 — as maintaining "overall stability" despite "many twists and disruptions."

Why This Matters: Trump Is Flying to Beijing

The big news this week isn't a tariff number. It's a flight booking.

Trump is scheduled to visit Beijing on 14–15 May 2026 — his first presidential visit to China since November 2017. This is a high-stakes trip arriving at a complicated moment:

• US–China trade tensions have eased from their 2025 peak but remain unresolved
• China has spent the past year quietly expanding its economic toolkit — deepening trade ties with Southeast Asia, the Middle East, and Europe to reduce dependence on the US market
• The Iran war (which disrupted the Strait of Hormuz and global energy markets in early 2026) has added a geopolitical overlay, with China actively mediating between Iran and Western powers — giving Beijing new diplomatic leverage
• Taiwan remains a flashpoint. China's Foreign Ministry reaffirmed on 7 May 2026 that Taiwan is "at the core of China's core interests" and warned the US must adhere to the "one China principle" for a stable bilateral relationship. This language, delivered just days before the summit, is pointed

The stakes: a productive Trump–Xi meeting could produce another meaningful tariff reduction, commitments on critical minerals access (rare earths, lithium — both important to US and Australian supply chains), and potentially a Boeing aircraft purchase deal (flagged by Senator Daines as a possible outcome). That would be risk-on for markets.

A meeting that stalls on Taiwan, critical minerals, or trade compliance would be risk-off — and could see tariff tensions reignite before the current truce framework expires.

ASX Sectors: What's Moving in May 2026

The gradual de-escalation in US–China trade tensions through 2025 and into 2026 has been a sustained tailwind for Australia's resources sector — which is structurally exposed to Chinese industrial demand.

As of May 2026:

Materials: BHP, Rio Tinto, and Fortescue have all recovered significantly from their 2025 tariff-war lows. Iron ore has held above USD $100/tonne on the back of improving Chinese industrial activity (China posted Q1 2026 GDP growth of 5.0%, though analysts note weak underlying consumption). The Trump–Xi summit is a near-term catalyst — any positive outcome could push iron ore and base metal prices higher.

Energy: The Iran war and Strait of Hormuz disruptions rattled energy markets in early 2026. Woodside and Santos have had a volatile year, but oil prices have partially stabilised as China's diplomatic involvement helps to ease tensions. A successful Trump–Xi summit that addresses Hormuz reopening would be directly positive for global oil supply and Australian energy exporters.

Tech: Australian tech stocks with US revenue exposure have benefited from the broader global equity recovery as trade tensions eased through 2025–26.

Consumer/retail: Companies with exposure to Chinese consumer spending (Treasury Wine Estates, A2 Milk, other agricultural exporters) are watching the summit closely. Any further easing of Chinese trade restrictions on Australian goods — wine tariffs were lifted in May 2024, but other product categories still have restrictions — would be directly additive.

US Stocks: Where Things Stand Now

The US market has largely priced in the de-escalation path from the 2025 tariff peak. The S&P 500 has recovered substantially from its mid-2025 lows. But the Trump–Xi summit creates a fresh binary event for certain names.

Apple (AAPL): Still heavily reliant on Chinese manufacturing. Tariff relief has helped, but Apple has been actively diversifying production to India and Vietnam. A positive summit outcome further de-risks the supply chain story. A negative outcome reignites it.

Nvidia (NVDA): US chip export controls to China remain in place regardless of the tariff situation — this is a separate regulatory track. The trade truce hasn't fully resolved Nvidia's China headwinds, and the summit is unlikely to shift the chip export control picture significantly.

Amazon (AMZN): The marketplace seller recovery story (detailed in our Stock Spotlight article next week) is ongoing. Further tariff reductions would accelerate it.

Boeing (BA): Senator Daines (R-MT) explicitly flagged a potential Boeing aircraft purchase as a summit outcome. A large Boeing deal — China was historically one of Boeing's biggest customers before the trade war — would be a meaningful positive for BA and for US manufacturing broadly.

Critical minerals plays: Companies with exposure to rare earth and lithium supply chains are watching for any summit commitments on Chinese critical mineral export restrictions. This affects US manufacturers and, by extension, Australian miners with joint exposure.

The Risks: Eyes Wide Open

The de-escalation narrative is real, but so are the risks.

1. Taiwan could derail everything.
China's pre-summit statements on Taiwan have been unusually pointed. If Trump makes any moves — or signals any moves — on Taiwan during the visit (arms sales, diplomatic recognition shifts, statements of support), China could pull back from trade concessions entirely. Taiwan is China's red line, and they've made that unusually explicit this week.

2. Critical minerals remain a sticking point.
The original 2025 truce partially broke down over China's restriction of critical mineral exports to the US (rare earths, gallium, germanium). This hasn't been fully resolved. If the summit doesn't produce movement here, it limits the trade relationship's ability to normalise — and has direct implications for Australian lithium and rare earth miners who compete in the same supply chains.

3. Structural decoupling is still happening.
Even as tariffs ease, both sides are actively building economic resilience against the other. China has spent the past year diversifying trade partners and deepening Belt and Road investments. The US is building out domestic semiconductor, EV battery, and critical minerals capacity. The headline tariff numbers may improve, but the long-term structural decoupling continues underneath.

4. Iran war and energy disruption.
The Strait of Hormuz disruptions from the Iran conflict have added a wildcard to global energy and logistics costs that the tariff story doesn't fully capture. Any escalation would hit global growth and markets regardless of what Trump and Xi agree to.

5. China's economic data is mixed.
China's Q1 2026 GDP growth of 5.0% looks solid on the surface, but analysts have flagged weak consumer spending, inconsistent data reporting, and inflationary pressure from the Iran war as structural drags. Chinese demand may not recover as quickly as the headline number implies.

AUD/USD: A Dollar That's Had a Big Year

The AUD/USD story in 2026 has been dramatic. The Australian dollar opened the year at approximately USD 0.6678 in January 2026 — reflecting global risk-off sentiment from the Iran war and lingering trade uncertainty.

As US–China tensions gradually eased through Q1 and into Q2 2026, and as commodity prices recovered on improved Chinese demand, the AUD strengthened substantially. As of 6 May 2026, AUD/USD hit a 2026 high of approximately 0.7268 — the strongest level since mid-2023 — before pulling back modestly to around 0.7190–0.7240 in the days following.

What this means for you:

• If you hold US stocks or ETFs: The AUD's ~8% appreciation against the USD since January means your US holdings have returned less in Australian dollar terms than the raw USD performance suggests. A portfolio that returned 10% in USD terms over that period may have returned closer to 2–3% in AUD terms after currency translation. This is the currency headwind cost of holding USD assets when the AUD is strengthening.
• If you're buying US stocks now: A stronger AUD works in your favour — your dollars buy more USD. At 0.72, you're getting significantly better value converting AUD to USD than you were six months ago at 0.67.
• Watch the summit: If Trump–Xi produces a genuinely positive outcome, risk-on sentiment could push AUD/USD higher still — potentially toward 0.74–0.75. Conversely, a summit that disappoints could see AUD retrace toward 0.70. Size your USD conversions with this binary event in mind.

What to Watch: Key Events Ahead

Trump–Xi Beijing Summit, 14–15 May 2026
The biggest near-term catalyst. Watch for: tariff announcements, Boeing deal, critical minerals commitments, any Taiwan-related language. This meeting sets the tone for global risk appetite for the rest of the month.

US Retail Sales Data (mid-May 2026)
A key read on whether US consumers are holding up under the combined pressure of elevated rates (Fed on hold at 4.25–4.5%) and residual tariff-driven price pressures. A strong number supports the soft-landing narrative and is equity-positive.

China Industrial Production and Retail Sales (mid-May)
Will Q2 Chinese economic data confirm or challenge the 5.0% Q1 GDP headline? Weak consumption data would temper optimism about Chinese demand recovery — and hit ASX materials accordingly.

Iran / Strait of Hormuz Developments
China has been actively mediating. Any progress on reopening the Strait of Hormuz would ease global energy costs, reduce inflationary pressure, and be broadly risk-on for markets including the ASX energy sector.

RBA Rate Decision (earlier this week on 5 May 2026)
The Reserve Bank of Australia's May Monetary Policy Board meeting has already concluded. The board voted 8-1 to hike the cash rate by 25 basis points to 4.35% — the third consecutive hike in 2026. The decision was driven by persistent inflation (headline CPI at 4.6%, underlying above target) compounded by energy price pressures from the Middle East conflict. This is a headwind for rate-sensitive ASX sectors (REITs, utilities, consumer discretionary) and adds upward pressure on the AUD in the near term. It also means Australian mortgage holders are feeling the squeeze — a factor worth watching for consumer spending data.

ASX Materials Earnings (May–June 2026)
BHP, Rio Tinto, and Fortescue results season is approaching. Will the recovery in iron ore prices and Chinese demand translate to earnings upgrades? The summit outcome will significantly colour how these are received.

The Bottom Line

The US–China trade war of 2025 was a genuine shock to global markets. The de-escalation since has been real — tariffs have come down materially from their peaks, the relationship has stabilised, and the AUD has recovered strongly on the back of improved global risk appetite and Chinese demand.

But May 2026 is a pivot point, not a resolution. Trump's Beijing visit next week is the most significant diplomatic event in the US–China relationship in eight years. The outcome will determine whether the de-escalation narrative accelerates — or stalls on the hard problems of Taiwan, critical minerals, and structural decoupling that no tariff number can paper over.

For Aussie investors: you're well-positioned if you've held resources and the AUD recovery has been good for your balance sheet. But this is a moment for clarity, not complacency. Know your exposures — to Chinese demand, to USD currency translation, to energy prices — and position for a range of outcomes from the summit.

The trade war blinked. Whether it's truly over is a question that gets answered next week in Beijing.

This article is for informational and educational purposes only. It does not constitute financial advice. Wall St. Down Under is not a licensed financial adviser. Always do your own research and consider seeking advice from a qualified professional before making any investment decisions.