“Stabilization” — Graham Allison Says the US-China Trade Truce Will Become a Formal Agreement

The big word will be stabilization. The truce that the two parties negotiated will, I suspect, become a formal agreement,” Graham Allison, Harvard professor and former assistant secretary of defense, said on CNBC’s “The China Connection” on Thursday.

The man who coined the Thucydides Trap concept — whose phrase Xi literally deployed in his opening remarks to Trump Thursday morning — assessed the summit’s trade trajectory with characteristic precision. Stabilization. Not breakthrough, not grand bargain, not transformation. Stabilization.

What Stabilization Looks Like in Practice

The two countries’ trade envoys reached “overall balanced and positive outcomes” at the preparatory summit in South Korea on Wednesday, according to Xi. “Both sides should work together to preserve this hard-won positive momentum,” Xi said.

The “overall balanced and positive outcomes” from the Seoul preparatory meeting — led by Bessent and China’s Vice Premier He Lifeng — form the foundation that the Beijing summit is formalising. What “balanced and positive” means in trade terms: an extended tariff truce that freezes current rates rather than ratcheting them higher; a mechanism (the “Board of Trade”) for managing implementation of purchase commitments; and specific purchase quantities for US goods that Trump can announce as wins.

The Trillion-Dollar Headline

“I would not be surprised if — as President Trump loves big headline announcements — that he might announce that China is going to buy an additional $1 trillion of American goods,” said Allison, including “a big buy” of Boeing aircraft, soybeans, beef, as well as the more advanced semiconductors that Beijing is interested in.

One trillion dollars. That is the headline number Allison predicts Trump will announce — packaged across Boeing aircraft orders, agricultural purchases, energy (LNG and crude), and potentially semiconductor access.

The specific Nvidia angle: Jensen Huang joins Trump’s China trip after the US president called the Nvidia CEO. Huang’s presence, and Trump personally recruiting him for the delegation, signals that some semiconductor export control relaxation for China is being discussed — with China’s AI chip purchases being the specific purchase commitment that makes up part of the trillion-dollar headline.

What Stabilization Means for the Iran War

US-China trade stabilization directly benefits the Iran war’s diplomatic track. As long as the trade relationship is a source of acute tension — tariffs above 100%, rare earth threats, technology decoupling — every US ask of China on Iran is contaminated by the trade war context. China’s cooperation on Iran is worth less when it is traded against trade war relief in a zero-sum framework.

Stabilization changes that dynamic. A formalised trade truce means US-China cooperation on Iran becomes possible as a separate diplomatic track, not contaminated by every tariff grievance and technology restriction.

The strategic stability framework — “constructive relationship of strategic stability” as the guiding framework for three years — gives both sides permission to cooperate on Iran without treating it as a precedent for broader concessions.