U.S.’s Asian allies want a Trump-Xi truce — but not at their expense

America’s Asian allies want U.S. President Donald Trump’s meeting with Chinese counterpart Xi Jinping to ease tensions between the world’s two largest economies. They don’t want that stability to come at their expense.

Ahead of Thursday’s summit in Washington, the U.S. joined Japan and South Korea in reaffirming its “ironclad” defense commitments to both countries and opposing unilateral attempts to change the status quo across the Taiwan Strait.

The statement came amid concerns that Trump could soften Washington’s position on Taiwan or other regional security issues in return for concessions from Beijing on trade, or assistance over the war with Iran.

“In general, U.S. allies and partners in the region do not want to see a breakthrough in U.S.-China relations that harms their national interests, but they also want to guard against a breakdown in U.S.-China ties that raises the risk of conflict in the region,” said Jeremy Chan, senior analyst for China and Northeast Asia at Eurasia Group.

Taiwan and U.S. credibility

Taiwan will be a notable flashpoint between the two sides, although it is not clear if the island will be part of discussions.

China has repeatedly demanded that the U.S. end arms sales to the democratically governed island, which Beijing considers part of its territory.

Trump postponed a planned $14 billion arms package for Taiwan following his previous summit with Xi in May and described arms sales as a negotiating tool in Washington’s relationship with Beijing, according to the Associated Press.

Ahead of this week’s meeting, Taiwan’s defense ministry said it remained in close contact with Washington to ensure that arms sales proceeded as planned.

“Japan and the Philippines fear that Trump could soften U.S. support for Taiwan in return for economic concessions from China or Beijing’s assistance in ending the war with Iran,” Jeremy Chan, senior analyst for China and Northeast Asia told CNBC.

Both Manila and Tokyo have had testy relationships with Beijing, with the Philippines clashing with China over its incursions into disputed waters in the South China Sea and Japan facing a chill in the bilateral relationship after Prime Minister Sanae Takaichi signaled last year that any Chinese invasion of Taiwan could trigger the involvement of Japan’s Self Defense Forces.

Chan’s view is echoed by Derek Grossman, founder of consulting firm Indo-Pacific Solutions in an August interview.

Grossman said that as the Iran war dragged on, Washington started to divert weapons and munitions from the Asia-Pacific region to sustain the war against Tehran.

This made it more difficult for Washington to deal quickly with any potential Chinese aggression, and it builds the narrative that the U.S. is not committed to the region in the way that it says it it is.

In Seoul, the relationship was rattled after Trump abruptly cancelled joint U.S-South Korea exercises last month, calling the drills “provocative” against North Korea. The move, experts told CNBC, risked the readiness of the combined forces, as well as U.S. credibility.

On the economic front, expectations are more modest, in comparison.

“Some minor deliverables on the trade front, potentially,” according to Andrew Tilton, Chief Asia-Pacific Economist and Head of EM Economic Research at Goldman Sachs.

He told CNBC’s “Squawk Box Asia” that “there was not an expectation of backsliding. The general view is both sides have incentives to keep the relationship on the rails for the next few months.”

When Trump unleashed his “Liberation Day” tariffs on Beijing back in April 2025, the two sides engaged in a tit for tat tariff war, sending duties on each other’s exports spiraling upward to a high of 145% for Chinese exports to the U.S., and 125% for U.S. exports to China.

While the Liberation Day tariffs under the International Emergency Economic Powers Act have been voided by the Supreme Court, a 12.5% levy has been imposed on Chinese exports from July, with Washington claiming that this was caused by China failing to prohibit forced labor for its products.

Other tariffs, such as sector-specific levies of up to 50% under Section 232, also remain on Beijing’s shipments to Washington.

Julia Wang, chief investment officer for North Asia at Nomura International Wealth Management told CNBC that countries are looking for two things: tariff stabilization and trade stabilization. An extension of the trade truce beyond six months would be viewed as a more meaningful signal of a stable relationship, she said.

However, as the summit got underway, Treasury Secretary Scott Bessent said the truce was extended for two months, to Jan. 10.

Countries in Southeast Asia are a little more sanguine about the meeting, but Eurasia’s Chan said that they will likely be looking out for a significant reduction in U.S. tariffs against China.

Narrowing the tariff gap between China and Southeast Asia could reduce the incentive for Chinese manufacturers to establish production elsewhere in the region, which could reduce flows of Chinese goods through their countries or decrease investment by Chinese manufacturers.

“One of the ironies for Southeast Asia is that although the countries in Southeast Asia don’t like the geopolitics, they benefit from the fact that companies are looking for neutral ground in which to situate their supply chains,” said Chris Miller, professor of international history at Tufts University, in an interview earlier this month.

For Southeast Asia, the most consequential outcome may therefore be the future of the trade truce and what the meeting reveals about tariff differentials between China and the region, Stephen Olson, visiting senior fellow at the ISEAS – Yusof Ishak Institute, wrote in the institute’s magazine on Sept 21.