US-China talks: 7 key issues Scott Bessent and He Lifeng will tackle before Trump-Xi summit

US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng will hold talks in New York on Sunday (September 20), ahead of President Donald Trump’s meeting with Chinese President Xi Jinping in Washington on September 24.

The discussions are expected to focus on trade, tariffs, artificial intelligence, rare earths and economic ties, while the Iran war and its impact on energy supplies have emerged as another major pressure point.

The meeting comes as Washington and Beijing seek to preserve a trade truce that expires in November and prevent fresh tensions from spilling into the broader relationship. US Trade Representative Jamieson Greer is also expected to participate.

Trade and tariffs

The tariff truce will be one of the central issues.

The US and China are discussing ways to maintain the existing arrangement and potentially extend it beyond its November expiration. Washington and Beijing are also working on reducing tariffs on selected non-sensitive goods, including energy and agricultural products.

The talks could also address proposed new US tariffs linked to Chinese industrial overcapacity and forced-labour concerns.

For Washington, the immediate objective is to secure greater market access for US businesses, farmers and manufacturers while monitoring China's implementation of existing commitments.

Artificial intelligence

AI has emerged as a major new area of competition between Washington and Beijing.

Bessent has said the US is open to discussions with China on shared AI risks and avoiding a bifurcation of the two countries' technology systems. His discussions with He are expected to include both open-weight and closed-weight AI models, as well as possible safeguards against misuse.

The two countries, however, remain divided over advanced chips, AI technology and allegations of technology copying. Washington has restricted China's access to some advanced semiconductor technology, while Beijing has criticised US efforts to limit its technological development.

Rare earths and critical minerals

Rare earths are another key bargaining point.

China is a major supplier of rare-earth materials and magnets used in electronics, automobiles, defence equipment and other technologies. Washington wants more reliable access, while Beijing has used export controls as leverage in previous trade negotiations.

Reuters reported that rare-earth supply and export restrictions are expected to feature in Bessent's discussions with He.

The issue is particularly important because disruptions to rare-earth magnet supplies can affect global manufacturing and technology supply chains.

Iran war and China's oil supplies

The conflict involving Iran has added an unexpected geopolitical dimension to the US-China talks.

China is a major buyer of Iranian oil, while the Trump administration has intensified pressure on Tehran and financial institutions involved in Iranian trade. Washington is also seeking greater Chinese cooperation on sanctions enforcement.

The disruption around the Strait of Hormuz has further complicated the situation by affecting energy flows to China and raising concerns about refinery operations.

For Beijing, prolonged disruption to Iranian oil supplies could create additional energy and economic pressures. For Washington, Chinese purchases of Iranian oil remain a major sanctions concern.

Fentanyl-related trade

The flow of fentanyl precursor chemicals from China to the US is another issue expected to feature in the broader Trump-Xi discussions.

Reuters reported that the two sides are expected to discuss efforts to curb the flow of precursor chemicals used to manufacture fentanyl.

The issue has previously been part of negotiations between Washington and Beijing and could provide another area for potential cooperation.

Taiwan and US arms sales

Taiwan is likely to be a more difficult issue at the leaders' summit than at the economic talks.

Chinese officials have indicated that Taiwan will be a major concern for Beijing, particularly a planned US weapons package for the island. The Trump administration has delayed a major Taiwan arms sale, with Trump previously describing it as a negotiating tool.

Beijing strongly opposes US arms sales to Taiwan, while Washington maintains longstanding commitments relating to the island's defence.

Autos and BYD

Chinese electric vehicle manufacturer BYD could also become part of the wider discussions.

Chinese officials are considering including BYD in a business delegation accompanying Xi to Washington. Trump has suggested that Chinese automakers could potentially manufacture vehicles in the US if they employ American workers.

The issue comes amid US tariffs and broader concerns in Washington about Chinese industrial capacity and the competitiveness of Chinese electric vehicles.