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China confirms first AI talks with U.S. have taken place, hints at trade truce extension
China’s Commerce Ministry confirms the first senior AI discussions with the U.S., and says tariffs and the extension of existing trade arrangements were also discussed ahead of Xi-Trump talks.
China’s Commerce Ministry confirmed that senior negotiators from China and the U.S. have held their first discussions focused on artificial intelligence. Commerce spokesperson He Yadong said the talks also covered plans aimed at reducing tariffs and extending trade arrangements previously agreed in Kuala Lumpur last October.
The confirmation came shortly before the planned talks between President Xi Jinping and President Donald Trump in Washington, with the CNBC report linking the AI dialogue to earlier discussions between U.S. Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng. Bessent had said in recent comments that the U.S.-China trade truce would be extended to January, and that the truce had kept tariffs lower while limiting China’s export controls on rare earths, which are described as critical for semiconductors and other products.
From an FX perspective, the key macro link is not the specific AI safety topic on its own, but the policy uncertainty it helps to frame: evidence of an ongoing dialogue can influence expectations for how quickly tariffs and strategic-tech frictions might ease or remain constrained. That, in turn, can feed into growth and inflation expectations and the risk premium embedded in USD and China-exposed assets.
What to watch next is whether the referenced extension and tariff-reduction plans are specified more clearly in the run-up to, or outcomes of, the Xi-Trump talks—and whether any concrete framework emerges for AI-related risk management.
Why this matters for FX
A sustained U.S.-China trade truce affects tariff expectations and the outlook for cross-border supply chains and growth, which can shift interest-rate and risk-premium expectations across currencies. Separately, an AI dialogue can influence the policy path for tech-related controls and reduce uncertainty around future restrictions, feeding into expectations for global trade and industrial activity. The most exposed currencies are USD and CNH (and by spillover, other risk-sensitive pairs) because trade-friction expectations tend to influence both the dollar’s relative rates outlook and broader risk sentiment.