Trump’s treatment of US allies has weakened his negotiating position with Xi Expert comment jon.wallace 12 May 2026 The president has alienated partners that once acted as force multipliers. But there are still opportunities to create a united front on common points of tension with Beijing. President Donald Trump travels to Beijing this week with the US’s alliance structure under enormous strain. Washington has fewer partners at its side, and a weaker hand to play. It doesn’t have to be this way. Alone, the US has leverage against Beijing, through controlling access to its advanced chips, sanctions on Chinese purchases of Iranian oil, and a consumer market Beijing can’t ignore. But Washington’s allies and partners provided strength that China has struggled to compete with – acting as force multipliers, aligning with the US on shared vulnerabilities. The Trump administration’s dismissal of such countries has created justified resentment. Many of America’s closest partners, buffeted by threats to NATO and tariffs, have concluded that US commitment may be a relic of the past. That is leading them to forge independent approaches to China, beginning with commercial ties. Beijing today benefits from greater economic connectivity with US partners and allies, fewer multilateral structures to bind its behaviour, and little political will on either side of the Atlantic to advance common projects. Yes, allied cohesion on China has always been aspirational, limited by different risk perceptions and economic pressures. But US and allied approaches have increasingly diverged since January 2025. And the current situation weakens the US negotiating position, even on President Trump’s ‘America First’ terms.Greater alignment by the US with its traditional partners on China policy – covering issues like critical minerals, semiconductors, synthetic drugs and beyond – is still possible and of benefit to both Washington and allied capitals. It shouldn’t be cast aside. Beijing cashes inToday, the floor has fallen out of the US alliance structure, as relations with partners and allies has deteriorated. While the US spent the winter focused on Venezuela, Greenland and Iran, Beijing focused on commercial diplomacy. The US has retreated from multilateral organizations, questioned the role of NATO, divided the G7 over tariffs, further hollowed out the WTO, launched UN-alternative structures like the Board of Peace, and gone to war with Iran. This has pushed allies to chart independent paths, leaving China to take advantage. While the US spent the winter focused on Venezuela, Greenland and Iran, Beijing focused on commercial diplomacy. In January, South Korean President Lee Jae Myung announced a ‘full scale restoration of ties’ between Seoul and Beijing, backed by new agreements on economic and trade cooperation, science and technology and the digital economy.Two weeks later, Canadian Prime Minister Mark Carney announced a comprehensive ‘strategic partnership’ with Beijing covering energy, agriculture, and Chinese electric vehicles, amounting to CAD$3 billion in new export orders for Canada. UK Prime Minister Keir Starmer’s subsequent visit netted £2.2 billion in export deals and around £2.3 billion in market access. In February, German Chancellor Friedrich Merz, though citing ‘difficult issues’ in trade relations, agreed to strengthen Germany’s ‘comprehensive strategic partnership’ with Beijing through 17 bilateral cooperation agreements. Trump will also seek bilateral deals – on products like American soybeans and Boeing aircraft, on top of the NVIDIA chips he recently approved for sale to China, despite national security concerns. Benefits are therefore rapidly accruing to Beijing. If the US and its traditional allies cannot develop a collective bargaining strategy, grouping their economies along similar red lines, China will only extend its run.DC’s demolition derby lays a few floorboards The floor of the US alliance structure cannot be rebuilt overnight, and its foundations were always imperfect. But two significant agreements indicate the Trump administration has realized that – in discrete instances – Trump’s ‘I alone can fix it’ instincts don’t work. Pax Silica, launched by the US in December 2025, aims to shore up silicon supply chains for semiconductor manufacturing and AI development. With 14 partners and counting, the initiative sees ‘allies and trusted partners’ like Australia, Finland, Greece, Japan, Norway, South Korea, and the UK align to reduce dependency on critical technology from China. Its viability will take time to evaluate, but this novel grouping addresses a common concern, and will only become more effective as it expands.Meanwhile, to break dependencies on China’s critical minerals, the US launched the new Forum on Resource Geostrategic Engagement (FORGE), alongside co-chair Japan. They and 52 other partners now belong to a preferential trade-and-investment zone for critical minerals, guaranteeing price floors. Like Pax Silica, it’s still early days. And shifting White House attention risks limiting full implementation. But both are encouraging datapoints that the Trump administration is slowly realizing that American unilateralism undercuts American power in certain instances. New constructions, with or without a foremanWashington, European capitals, and Indo-Pacific allies should build on such initiatives, identifying areas where working with allies is clearly to the advantage of all. This can take a few forms. First, groupings like Pax Silica and FORGE should be bolstered by renewed efforts to bring in new country signatories and investments. Strengthening these groups will both improve members’ hands with Xi and promise material benefits to all its participants. — Laurel Rapp and Max Yoeli discuss the coming summit from the US perspective. Establishing or reviving other groupings, for instance on synthetic drug interdiction, is another obvious area for close US cooperation with allies. Fentanyl is a continuing source of American overdose deaths, with the US claiming that many of the chemicals used in its production originate in China. But the Trump administration chose not to extend US leadership of a nearly 160 country coalition to counter production and distribution of illicit substances. Revitalizing this network should be a priority. Both Biden and Trump hammered Xi on fentanyl, and US overdose deaths have fallen since 2023, possibly due in part to US diplomacy. But without a wider grouping of concerned partners, success may be limited or short-lived. It is also crucial that trade talks by the US, Canada and Mexico starting in July are a success and deliver real constraints on China’s investments in North American manufacturing. Allowing internal divisions to prevent a protective arrangement would be an own goal and play into China’s strategy.Rebuilding without WashingtonFinally, US allies and partners must identify shared red lines for bilateral cooperation with China that will be upheld independent of Washington. Most countries have national China strategies, and all have identified red lines for bilateral cooperation. But internal limits are not the same as a shared approach. The logic of greater allied alignment remains sound even where US commitment is uncertain. If allies can establish common approaches on China policy in other areas, it may manage Washington’s frustration with their hedging. And finding agreement may also prove useful for the future: the US may become more cooperative on some issues after President Trump leaves office. And the US’s structural rivalry with China looks likely to endure through successive administrations for some time to come.
Chatham House
To estimate how AI is reshaping work, it is now standard to ask AI itself to score how exposed each occupation is. The instrument is thus an instance of the phenomenon. This column replicates the most common scoring procedure using four frontier AI models and identical task data. The share of US occupations classified as ‘high direct exposure’ to AI differs widely, ranging from 2.7% to 51.5% depending on the model used. The findings imply that any analysis based on AI-generated exposure scores should report results from at least two or three different frontier AI models.
Center for Economic Policy Research
Authors of book about classroom AI see growing void where foundational knowledge used to be
Harvard University
The Trump–Xi summit: can progress be made on Iran? Expert comment jon.wallace 11 May 2026 President Trump should not concede much on issues like Taiwan. But both powers have an interest in opening the Strait of Hormuz and making progress on AI safety. For Beijing, President Donald Trump is the gift that keeps on giving. His decisions have handed China’s leadership advantages of which it cannot have dreamed before he arrived in the Oval Office for the second time.Trump has cancelled the Biden-era subsidies for clean technology, allowing China to extend its lead. He has slapped tariffs on allies including Vietnam and India, driving them towards Beijing. He has called NATO into question and sided with Russia in its aims over Ukraine. And now he has tied up the US military and his own attention in a war with Iran which he cannot easily end.That comes after a year in which China demonstrated its rising power. In October, President Trump was forced to back down on tariffs, after Beijing threatened to withhold critical minerals. In March, Xi’s government published its latest five-year plan, showing how it intends to reap the fruits of its strategy of becoming the world’s dominant advanced manufacturer. Meanwhile China continued to rapidly develop a lead across much of the waterfront of technology, with the exception of the most advanced AI.Seeking short-term wins?When Trump meets President Xi Jinping this week in Beijing, therefore, one question is whether the encounter will confirm a further rebalancing between the two superpowers – in China’s favour.Trump’s allies, at home and abroad, are afraid that the president will make long term strategic concessions for a handful of soybean, sorghum and Boeing jet sales – seeking short-term ‘wins’ ahead of the midterm elections in November.He should resist that impulse. Hugely important issues for world stability are at hand, and there are vital US interests that he should pursue.Tension between China and Japan is rising, becoming an even more likely flashpoint than Taiwan, which Beijing considers Chinese territory. China’s assertiveness in the East China Sea and South China Sea worries other neighbours, including the Philippines and South Korea, with the latter openly debating whether to acquire nuclear weapons. China is also asserting that it is a ‘near-Arctic nation’, a triumph of language over geography which signals its ambitions for both a mining and military presence in that opening maritime region. In space, China’s ability to block or destroy other countries’ satellites is growing. Most immediate, though, is the conflict in Iran. The world needs a solution, and China has influence over Tehran that it has so far chosen not to use. Trump should also make cooperation on AI a priority: both Washington and Beijing increasingly recognize the threats emerging from the technology, as well as its transformational opportunities.Trump and the Washington consensusUS discomfort over its relative loss of power to China, notably in manufacturing, has been rising for decades. The US has never had a rival like China: its economy size, technological ability, military capacity and ideology make it far more formidable than the USSR ever was.Alarm at Beijing’s growing challenge to US dominance is one of the forces that brought Trump to the presidency – twice. And China’s position as the greatest threat to the US is one of very few issues on which Republicans and Democrats can still agree.Europeans and other US allies have tended to see that Washington consensus as excessively belligerent – or they did until they began to realize the existential challenge that China’s export policy poses to their own manufacturing industries.Trump’s position has been something of an anomaly. The president is more doveish on China than almost all his administration. Many were disconcerted that he agreed to let Nvidia, whose chips underpin the US’s slender lead in AI, sell its H200 chips (only one generation behind the premier Blackwell chips) to China. He has frequently talked of his ‘friendship’ with Xi. That has led to fears that in search of election-year gains he might, for example, change US language on Taiwan from saying it ‘does not support’ independence to a statement that it opposes it. China has some leverage with Iran but will want something from the US in return, if it is to use it. Enough voices are warning against that outcome that it may deter the president. But for all the intense preparation for the trip, delayed because of the Iran conflict, there has been a lack of clarity on the US side about this meeting’s goals – partly because both the standoff in the Strait of Hormuz and the state of AI have been developing so fast.On Iran, Wang Yi, China’s top diplomat, has called for the Strait of Hormuz to be opened ‘as soon as possible’ in talks with his Iranian counterpart. Asian countries including China have been among the most affected by the interruption caused to supplies of oil, gas, fertiliser and helium (needed for semiconductors, healthcare and pharmaceuticals). China has some leverage with Iran but will want something from the US in return, if it is to use it.
Chatham House
The conflict in the Middle East has pushed energy prices sharply higher, but the implications for UK inflation will depend on the scale and duration of the shock as well as its propagation through firms’ costs, prices, margins, and wages. This column uses new survey data from UK firms to provide early evidence on how business expectations are responding. Firms currently expect higher prices and lower margins to be the main margins of adjustment, especially among energy-intensive firms. Consistent with this, firms’ expectations for their own prices and costs have risen since the war began. Wage and employment impacts remain more muted but could evolve over time.
Center for Economic Policy Research
