President Donald Trump heads into a historic meeting with Chinese leader Xi Jinping facing a delicate test: projecting strength against America’s top adversary without triggering another economic shock at home.

The high-stakes encounter, the first between the two men in more than six years, comes after months of tariff feints and escalating rhetoric that have rattled markets and strained global supply chains — and at a moment when Trump is eager to prove that his economic nationalism can still deliver concrete wins.

Administration officials are voicing confidence that Trump and Xi will step back from the brink of a second trade war when they meet Thursday morning local time in South Korea, but even a small misstep could send markets spiraling, as they did when Trump last imposed triple-digit tariffs on Chinese imports in April. Markets have grown accustomed to Trump’s tariff back-and-forths over the last 10 months, but investors remain queasy over the specter of new levies, like the 100 percent the president is now threatening.

Trump’s favorite negotiating tool — tariffs — hasn’t worked on China the way it has in other places. While the vast majority of countries rushed to notch trade agreements, Beijing has responded with not only its own tariffs but an effective embargo on U.S. soybean purchases and sweeping export controls that underscore the near-monopoly the country continues to have over rare earth materials, which are used in everything from iPhones to military equipment.

Trump has raised expectations for a successful confab, telling reporters multiple times in the last week that his meeting with Xi is “going to work out very well.”

“I think we’re going to have a deal,” Trump said Wednesday in South Korea, his third stop in a weeklong Asia trip. “That’s really a great result that’s better than fighting or going through all sorts of problems. The world is watching.”

The president is likely to brandish any concessions he secures from Xi as proof that his pressure campaign is working.

“I think the president is very focused on reaching an equilibrium in the economic relationship where we stop the cycle of escalation and we get to some sort of at least temporary or partial resolution to some of the immediate economic headwinds,” said Alex Gray, who served as National Security Council chief of staff and deputy assistant to the president during the first Trump administration.

A reset of the U.S.-China relationship to where it was before the latest spat would give both leaders a way to claim victory to their domestic audiences. China’s embargo of U.S. soybean exports has been a persistent pressure point for Trump as frustrated farmers complain that Washington bailed out Argentina but has left them waiting for relief, a political vulnerability the president is eager to neutralize. And for Xi, the talks offer a chance to ease mounting economic pressure at home, where sluggish growth and capital flight have underscored the limits of Beijing’s self-reliance strategy.

The two sides have quietly negotiated for months with little tangible progress, save for a May session in Geneva that produced a limited accord that ended a brief round of tit-for-tat tariffs between the two countries. Something similar could happen again — a limited agreement that deescalates the latest round of tensions but does little to meaningfully address the U.S.’s longstanding frustrations over its trade imbalance with China.

“I think it will be a fragile truce on trade,” said Matt Pottinger, a former deputy national security adviser during the first Trump administration, now chairman of the China program at the Foundation for Defense of Democracies. “None of the systemic problems go away, but the two sides will probably agree to kick the can into next year before either pursues further escalation.”

The “Phase One” trade pact that the U.S. and China signed in January 2020 called for hundreds of billions of dollars in additional Chinese purchases of U.S. goods and tougher intellectual-property enforcement. Yet China never met its purchase targets, which it blamed on the Covid-19 pandemic. Although former President Joe Biden maintained and expanded Trump’s tariffs on Beijing, Trump administration officials and congressional Republicans have accused him of failing to aggressively enforce the pact.

The U.S. Trade Representative’s Office last week launched an investigation into what it describes as the country’s “apparent failure” to comply with the deal.

Treasury Secretary Scott Bessent, following meetings in Kuala Lumpur with Chinese Vice Premier He Lifeng, outlined the “framework” of an agreement in which China resumes its purchases of soybeans and delays implementation of new export controls, and the U.S. agrees not to impose new tariffs.

China’s foreign ministry, in a statement ahead of the meeting, said it is “possible to stabilize and advance the bilateral relationship as long as the two sides fully implement the important common understandings reached by the two heads of state.” China also purchased multiple ships of American soybeans in advance of the meeting, a move that Agriculture Secretary Brooke Rollins in a post on X called “a great start.”

Bessent has also said that Beijing will, as part of the framework, agree to new provisions on the precursor chemicals used to manufacture fentanyl, something Trump has been pushing for since he slapped a first round of tariffs on China in February. It’s a politically potent issue for Trump, who has repeatedly accused Beijing of failing to curb the flow of fentanyl into the U.S., but China hawks are skeptical that the commitment will be substantial or long-lasting.

“Our attitude in the first administration was ‘don’t bother with talks.’ Talks only work in Beijing’s favor because whatever comes out of these conversations, whatever agreement you come up with, will only be valid in so long as it favors the Chinese side,” said a first-term Trump official, granted anonymity to discuss internal conversations. “As soon as it becomes inconvenient, they walk away from it.’”

The official said that while Trump stands to look “like a senior diplomat, a statesman” in the meeting, Xi stands to get more out of it “if he can be made to look strong to his people, if the outcome is yet another meaningless trade deal.”

Other former Trump officials worry that the president could be persuaded to make significant concessions, such as lifting export controls on semiconductor chips or the equipment used to manufacture them. Trump faced criticism in August for striking a deal with Nvidia to allow the sale of certain chips to China.

“The base case is, they muddle through and they have a meeting and then they agree to have more meetings and more trade talks,” said Liza Tobin, who served as National Security Council director for China during the first Trump administration and the start of the Biden administration. “The worst case scenario for the United States is Trump concedes a whole lot of these real concessions.”

But Trump, who likes to maintain maximum negotiating leverage heading into meetings with world leaders, hasn’t signed off on the framework Bessent has outlined publicly, telling reporters on Air Force One earlier this week that “nothing has been agreed to yet.” Trump has also teased that he “might” sign a final deal on TikTok on Thursday.

The meeting comes as Trump’s tariff strategy is facing scrutiny at home. Five Republican senators joined Democrats on Wednesday against Trump’s 50 percent tariff on Brazil, a largely symbolic vote on a measure that the House has said it won’t take up even as it represents a rare GOP rebuke of Trump’s policies.

Even if the framework holds, it would represent a narrow truce rather than a structural shift. It’s likely to sidestep the deeper disputes that have long defined the U.S.-China relationship as Trump officials continue to pressure China to curb industrial subsidies, improve market access for U.S. companies and curb China’s control of key supply chains.

It’s also unclear to what extent China will push a conversation about Taiwan. Trump, asked Friday about whether he’s open to changing U.S. policy on Taiwan, said he didn’t want to talk about it because he didn’t “want to create any complexity” for an “already complex” trip.

Pottinger, the former deputy national security adviser, said that the president’s style is “to maintain an open channel to the top decision makers within adversarial states.” But, he added, Trump “understands that Beijing coercing Taiwan would do serious harm to U.S. economic and national security and would be a stain on President Trump’s record.”

Recent trade accords with southeast Asian countries — including Vietnam, Thailand, Cambodia and Malaysia — may give Washington a stronger hand heading into the meeting, showing allies that the U.S. is trying to chip away at Beijing’s regional grip. The U.S. has also in the last week inked agreements with Australia and Japan to collaborate on establishing a rare earth supply chain outside of China, and signed memorandums with Thailand and Malaysia that could lead to rare earth exports from both countries.

“It is really important for them to continue to lock up these deals in the Indo Pacific, because with all of this, if the outcome is that these countries begin to tilt even more towards China, economically and commercially than they already are, that’s a terrible outcome for the United States,” said Michael Sobolik, a senior fellow at Hudson Institute and former aide to Sen. Ted Cruz (R-Texas).

Ari Hawkins, Diana Nerozzi and Doug Palmer contributed to this report.