President Donald Trump‘s current tour through Asia is generating significant momentum for U.S. trade relationships and national security partnerships, with markets responding enthusiastically to the developments. Yet beneath the optimism lies a critical question that’s shaped decades of U.S.-China relations: Can Beijing’s commitments ever be taken at face value?
Markets Rally on Trade Progress
The stock market is showing strong approval of Trump’s Asia strategy, with what appears to be near “melt-up mode” according to recent market commentary. The emerging framework suggests the effective U.S. tariff rate could settle around 15%—a relatively modest number that would support corporate profitability without triggering the trade war escalation many had feared.
What’s particularly noteworthy here is the absence of retaliatory measures from Asian trading partners. Rather than responding with their own tariffs, countries across the region are engaging in constructive deal-making—a sharp contrast to the trade tensions that dominated headlines in previous years.
Southeast Asia Deals Target Chinese Transshipment
The substance of Trump’s Southeast Asian agreements reveals a sophisticated understanding of how global trade flows actually work. Deals with Vietnam, Malaysia, Cambodia, and Thailand all include critical transshipment provisions designed to close a loophole China has exploited for years.
This matters more than it might initially appear. Chinese manufacturers have routinely routed exports through Southeast Asian countries to circumvent U.S. tariffs and trade restrictions—essentially using these nations as paper fronts while maintaining the same unfair trading practices. The new agreements aim to shut down this backdoor entirely.
Japan Relationship Strengthens Under New Leadership
The diplomatic chemistry between Trump and Japan‘s new Prime Minister Sanae Takaichi appears remarkably strong. Takaichi has gone so far as to nominate Trump for the Nobel Peace Prize—a gesture that signals the depth of the relationship being built.
Beyond symbolism, concrete economic commitments are taking shape. Japan has agreed to substantial purchases of American-made Ford F-150 trucks, addressing long-standing market access concerns. Additionally, a massive $550 billion Japanese investment in the U.S. appears to be moving forward in some form, though the timeline and structure remain under discussion.
The China Framework: Familiar Promises Return
The emerging framework with China, largely shaped by Treasury Secretary Scott Bessent, follows a pattern that should sound familiar to anyone who’s followed U.S.-China relations over the past decade.
The framework reportedly includes a suspension of China’s rare earth export moratorium—possibly for one year—in exchange for Trump suspending his threatened 100% tariff surcharge. China would resume purchasing American soybeans, conveniently timed with market prices jumping to $11 per bushel. And once again, Beijing is promising action on fentanyl precursor chemicals.
The Fentanyl Promise—Haven’t We Heard This Before?
This is where history casts a long shadow. China first promised to crack down on fentanyl precursor exports seven years ago during the 2018 G20 summit in Buenos Aires, Argentina. At that bilateral dinner, Trump raised the fentanyl crisis as the first order of business with President Xi Jinping.
Xi said yes then. The reality? The flow of precursor chemicals never stopped. American communities continued to be devastated by fentanyl overdoses while Beijing’s promises remained just that—promises. The fundamental question: Why should this time be any different?
U.S. Leverage Extends Beyond Economics
The United States enters these negotiations from a position of considerable strength that goes well beyond economic factors. Recent geopolitical developments have significantly altered the balance of power:
America’s recent actions against Iran have effectively knocked China out of major Middle Eastern strategic positioning. Chinese influence in South America is being challenged and rolled back in countries like Venezuela and Argentina. The U.S. economy remains the world’s largest and most dynamic, giving Washington inherent negotiating advantages.
President Trump has made clear that Taiwan‘s status is non-negotiable, despite any Chinese expectations otherwise. And Beijing faces a critical test on Russian oil purchases—continued buying funds Moscow’s war in Ukraine, and failure to halt those purchases could trigger secondary sanctions that would effectively remove Chinese commerce from the dollar-based financial system entirely.
TikTok Sale and Ongoing Concerns
The TikTok situation also appears headed toward resolution, with a sale seemingly in the works. While opinions differ on the platform’s value, concerns about its potential use as a Chinese intelligence-gathering tool remain central to the national security debate surrounding the app.
Investigating Phase One: A Record of Broken Commitments
Perhaps most telling is the planned U.S. investigation into the original Phase One trade deal signed nearly six years ago. That agreement, reached amid much fanfare, established specific purchase commitments and trade practice reforms that China was supposed to implement.
The track record? Beijing failed to meet virtually any of its obligations. The deal existed on paper while Chinese practices continued largely unchanged. This history isn’t ancient—it’s the immediate backdrop to current negotiations.
The Trust Deficit That Defines the Relationship
What emerges from examining these developments is a fundamental tension at the heart of U.S.-China relations. Trade deals and diplomatic frameworks can be negotiated, signed, and announced. But enforcement and compliance are entirely different matters.
China operates on different timelines and with different priorities than Western democracies. Commitments that seem binding in Washington or Wall Street terms may be viewed as flexible starting points in Beijing. The Chinese Communist Party has consistently demonstrated that international agreements are subject to reinterpretation based on its own strategic interests.
The pattern is clear: Beijing says yes, then fails to follow through. This happened with fentanyl seven years ago. It happened with Phase One trade commitments six years ago. The question facing investors and policymakers now is whether anything has fundamentally changed to break this cycle.
What to Watch Going Forward
The immediate market reaction to Trump’s Asia tour has been positive, and the framework of deals being constructed addresses real structural issues in Asian trade relationships. The Southeast Asian transshipment provisions, if properly enforced, could close significant loopholes. The Japan relationship appears genuinely strengthened.
But the China piece remains the wild card. Markets are pricing in optimism, but investors would be wise to watch for actual implementation rather than announced intentions. The fentanyl commitment means nothing until precursor chemical flows actually stop. The rare earth agreement only matters if it’s sustained beyond a temporary suspension. And any framework is only as good as China’s willingness to honor it beyond the signing ceremony.
The pattern of the past decade suggests caution. Beijing has proven adept at securing the benefits of agreements while avoiding the obligations. Until that fundamental dynamic changes, trust remains the scarcest commodity in U.S.-China trade relations.
The critical factor for markets and investors: Don’t just watch what China promises. Watch what China actually does in the months following any agreement. History suggests those two things may look very different.