The meeting between Donald Trump and Xi Jinping in Beijing began in a conciliatory tone, but the first remarks from both leaders showed that US–China relations remain complex. Xi said the two countries should be “partners, not rivals”, pointing to the need for stable cooperation between the world’s two largest economies. At the same time, he made clear that Taiwan remains the most sensitive issue in bilateral relations.
The warning that poor management of the Taiwan question could lead to a “collision” or even “confrontation” is an important signal for investors. It shows that behind the diplomatic setting of the visit, geopolitical risk remains high. For financial markets, Taiwan is not only a political issue, but also a key factor for global technology supply chains, especially in the semiconductor sector.
Trump adopted a more conciliatory tone, calling Xi a “great leader” and suggesting that US–China relations could become “better than ever before”. From a market perspective, the composition of the US delegation was also important. The presence of leading technology executives, including Nvidia’s Jensen Huang, Tesla’s Elon Musk and Apple’s Tim Cook, suggests that the talks are not limited to tariffs and trade.
Access to the Chinese market, exports of advanced technologies, semiconductors and the stability of global supply chains are likely to be among the key economic issues discussed. These topics are particularly important for US technology companies, carmakers and consumer goods groups, for which China remains either a major sales market or an essential part of the production chain.
The potential market impact of Trump’s visit to China could be significant, but it will depend on whether positive rhetoric is followed by concrete decisions. Reports about a possible mechanism under which the United States and China would each identify around USD 30 billion worth of goods for partial tariff relief could support risk appetite. Such a move would be positive for industrial companies, exporters, technology groups and businesses heavily exposed to trade with China.
Semiconductor stocks, carmakers and large consumer companies may be particularly sensitive to any announcements from Beijing. These sectors are directly exposed to the future shape of US–China economic relations. Any easing of trade tensions could improve sentiment, while a lack of progress could quickly revive concerns about tariffs, export restrictions and supply chain disruptions.
However, the scope for a strong rally in risk assets is limited by the latest US inflation data. According to Reuters, US producer prices rose by 1.4% month on month in April 2026, the largest monthly increase since March 2022, while the annual PPI rate reached 6.0%, the highest level since December 2022. The increase was driven by both goods and services, with gasoline prices rising sharply.
The structure of the data was uncomfortable for markets. Services prices rose by 1.2%, while goods prices increased by 2.0%. Reuters also reported that gasoline prices jumped by 15.6%, adding to concerns that higher energy costs could feed through to transport, distribution and production costs.
This means that Trump’s visit to China is taking place in a more difficult macroeconomic environment. Higher producer inflation increases the risk that companies will pass higher costs on to consumers. It also worsens the outlook for corporate margins and limits the Federal Reserve’s room for rapid monetary easing.
In such an environment, even positive news from Beijing may be partly offset by higher bond yields and a stronger dollar. Investors will have to consider the possibility that US interest rates remain high for longer. If inflationary pressure persists, the market could also begin to price in a more hawkish Federal Reserve stance.
The most positive scenario for markets would involve partial tariff relief, a declaration of wider access to the Chinese market and some reduction in technology tensions. In that case, Wall Street could continue to rise, especially in technology, semiconductors and industrials. Asian markets and currencies linked to the Chinese economic cycle could also benefit.
Still, the strong US PPI reading means the market reaction may be selective rather than euphoric. Investors are likely to reward companies that would benefit directly from any easing in trade tensions, while remaining cautious toward sectors vulnerable to higher financing costs and margin pressure. This creates a more complicated backdrop than a simple “risk-on” reaction.
The negative scenario would involve a lack of progress on trade or a tougher tone on Taiwan. In that case, markets could see a classic risk-off reaction, with weaker equity indices, stronger demand for the US dollar and renewed interest in US Treasuries. Technology and semiconductor stocks would likely be among the most exposed sectors.
Trump’s visit to Beijing may therefore improve market sentiment in the short term, but its lasting impact will depend on specific decisions on tariffs, technology and market access. A conciliatory tone from both leaders is not enough to permanently reduce the risk premium. Taiwan remains a strategic red line for Beijing, while the latest US inflation data keeps pressure on the Fed and reminds investors that markets are still operating in an environment of geopolitical tension, high financing costs and elevated inflation.
