Trump-Xi Showdown Casts a Shadow Over the Global Economy
(Bloomberg) — US President Donald Trump’s talks with China’s Xi Jinping is set to be the week’s pivotal event, covering crucial issues from tariffs to technology related to the world’s two largest economies.
While the leaders meeting in Washington on Thursday will try to keep an awkward relationship as stable as possible, that could prove harder than when they convened in May. Tensions have ramped up since then, and US officials have criticized China for not living up to the terms of their one-year trade truce.
Everything from tariffs to artificial intelligence controls is expected to be up for discussion. Looming over the meeting are Chinese export curbs on critical minerals and rare earths that have caused supply shocks for US and other global companies.
Negotiations are likely to come down to the wire after both sides played for leverage in recent weeks. It’s not clear if their trade truce will be extended by a year, as many observers expect, or if the US side will insist on a shorter timeframe as a way to pressure China into more concessions. Beijing, for its part, would like the detente to last until the end of Trump’s term.
So far, the US president has tried to not offend his counterpart: a much-anticipated and already-delayed report on excess capacity is being pushed back until after the summit, and is likely to suspend many of the tariffs on China, leaving only a 7.5% duty. Trump has also downplayed reporting that China provided Iran with targeting data to attack US service members in the Middle East.
The event will also be closely watched in Brussels as the European Union gears up for its own talks with China in early October. According to trade commissioner Maros Sefcovic, that meeting will need to show concrete results on the Chinese side to avert countermeasures being deployed by the bloc.
What Bloomberg Economics Says:
“Trade tensions between the US and China — a central theme of previous meetings Trump and Xi — have eased sharply since the two last met. We think both sides want to avoid another flare-up and relative stability in the relationship is likely to continue. But as the US rebuilds its tariff wall, the risk of renewed escalation remains.”
—Nicole Gorton-Caratelli, Adam Farrar and Maeva Cousin. For the full note, click here
Elsewhere, business surveys from Japan to the euro zone, a possible interest-rate hike in Norway, and new economic forecasts from the OECD on Wednesday will be among the highlights.
Click here for what happened in the past week, and below is our wrap of what’s coming up in the global economy.
US and Canada
In the week following the Federal Reserve’s decision to raise rates, investors will be monitoring comments from several officials for clues on the tempo of further adjustments. Kicking off the week is Minneapolis Fed President Neel Kashkari, speaking to Fox News on Sunday, and then Chicago Fed President Austan Goolsbee will discuss monetary policy in London on Monday.
On Tuesday, New York Fed President John Williams offers keynote remarks at a Treasury market conference. Other Fed officials scheduled to speak over the coming week include Philip Jefferson, Tom Barkin, Michael Barr, Beth Hammack and Anna Paulson.
The US economic data calendar is relatively sparse. On Wednesday, S&P Global will release its preliminary September manufacturing and services PMIs. Both are projected to remain consistent with steady growth.
At week’s end, the government’s August durable goods orders and shipments data will offer hints about the momentum in business investment. Economists project a solid advance in nondefense capital goods orders excluding aircraft.
Also on Friday, the University of Michigan will release its final September consumer sentiment index, which includes respondents’ views of inflation expectations.
For more, read Bloomberg Economics’ full Week Ahead for the US Canada’s government plans to extend fuel excise tax relief, while investors will watch for a package of regulatory and labor reforms meant to speed up project construction timelines.
Meanwhile, Bank of Canada Governor Tiff Macklem will speak on the economy in Halifax on Monday, and updated retail numbers for July are due on Thursday.
Asia
Monetary policy decisions in China and Indonesia will make the week an important one for economy watchers.
China sets its one- and five-year loan prime rates on Monday, expected to remain unchanged at 3% and 3.5% respectively. The announcement will still be scrutinized for signals on Beijing’s appetite for further monetary support to state banks and insurers as it seeks to sustain growth.
Indonesia reviews rates on Wednesday, with the benchmark expected to stay at 5.75%. Reserve Bank of Australia Governor Michele Bullock participates in a fireside chat on Tuesday.
Economic activity will be the next focus, with purchasing managers’ indices set to indicate the strength of activity across a region grappling with rising energy prices driven by tensions in the Middle East.
India’s flash September PMIs arrive Wednesday and will be closely watched after the overall pace of activity slowed in July to the lowest in over four years and stayed flat in August. With manufacturing and services still in expansion territory, though, the latest figures will show whether business activity is strong enough to carry forward robust economic growth seen in the April-June period.
Japan’s PMIs follow Thursday, offering a gauge of whether activity remains broad-based across manufacturing and services.
Australia also releases PMIs on Wednesday. India’s core industries output for August, due Monday, will be watched for similar signals on growth.
Labor markets will put Australia back in focus on Thursday after employment fell by 15,800 in July. The August figures will help set the stage for the central bank, which is due to meet the following week.
Trade and prices will also be watched, with South Korea’s early trade figures and Taiwan’s export orders providing fresh signals on the regional export and technology cycle. Singapore releases inflation data, while Thailand publishes trade figures later in the week.
For more, read Bloomberg Economics’ full Week Ahead for Asia Europe, Middle East, Africa
Following this month’s rate hikes from the Fed and the European Central Bank, institutions managing three of the world’s most-traded currencies will set policy on Thursday.
The Swiss National Bank is unlikely to change its rate from the current level of zero. Investors will watch for commentary on the economy after surprisingly strong growth and the fastest inflation in almost two years.
Similarly, with the franc having just touched a 17-month low against the euro, officials could relax language threatening possible interventions.
Sweden’s Riksbank is expected to keep its rate at 1.75% as it awaits indications that a recovery is gaining ground and low core inflation is picking up. Its policy path may signal a higher chance of a hike in the waning months of 2026 than the 50% likelihood projected in June.
Norges Bank’s decision has split economists, with some predicting the second rate hike for the year to tame inflation, and others anticipating no change. A steady outlook for activity for almost all business sectors has bolstered the case for tightening, though most analysts agree any hike would be the final one of the cycle.
Several other decisions are on the calendar:
On Tuesday, Hungarian officials may keep rates steady after two consecutive cuts. The focus is on whether they plan to lower their inflation target. Nigeria is expected to resume easing the same day with a 50-basis-point cut, to 26%, as a firm naira and locally produced fuel blunt the inflation impact of global oil-price shocks. South Africa may tighten on Wednesday with a quarter-point increase, to 7.25%, as energy-driven price pressures build and policymakers seek to keep the rand attractive to investors. Lesotho and Eswatini will likely follow their neighbor the next day to protect pegs to the rand, as external inflation risks intensify. Also on Thursday, Ghana and Egypt may extend rate pauses at 14% and 19%, respectively. PMIs in the euro zone and the UK will be watched by investors scrutinizing how resurgent oil prices are hurting activity.
Following the far-right Alternative for Germany’s win in a state election this month, Ifo business confidence on Thursday will reveal if subsequent political turmoil is weighing on sentiment in Europe’s biggest economy.
Italy’s deficit number for 2025 on Tuesday could be critical. A revision down to the EU’s 3%-of-output ceiling might open the door for the country to exit the bloc’s special fiscal monitoring regime.
The UK, whose debt pile is also in the sights of investors, will publish numbers on Tuesday revealing the state of Britain’s public finances in August, the first full month of Andy Burnham’s premiership.
For more, read Bloomberg Economics’ full Week Ahead for EMEA Latin America
Banco Central do Brasil on Tuesday posts the minutes of the Sept. 16 decision to lower its key rate for a fifth straight meeting, a quarter-point cut to 13.75%.
Next month’s presidential election and global geoeconomic uncertainty had analysts expecting policymakers to issue a guarded post-decision statement, but the board instead retained language from August that to some observers suggested an openness to additional easing.
Brazil watchers can also look forward to the quarterly monetary policy report, and will be on alert for shifts in BCB’s inflation and output forecasts — expectations for a revised rate outlook are low — amid the standard raft of revised projections and scenario analyses.
Rounding out the week in Brazil, the mid-month consumer prices report may show inflation heating up in line with analysts’ current 4.9% year-end estimate, after slowing briefly back into the central bank’s target range.
Argentina is fresh off a weak second-quarter output report, which showed that South America’s No. 2 economy shrank for the first time in two years, and some analysts and investors are bracing for more of the same.
GDP-proxy data for July due on Thursday may only deepen concerns that have some analysts marking down their full-year growth forecasts and evaluating the risk of a technical recession.
Paraguay’s central bank will most likely keep its key rate at 5.5% for a seventh straight month on expectations inflation will accelerate in the coming months to end the year at 3.3%, just under the 3.5% target.
In Mexico, the main event is the central bank’s monetary policy meeting, preceded by July’s economic activity report and the mid-September inflation report.
Banxico’s current guidance holds that it’s “appropriate to maintain the reference rate at its current level” of 6.5%, certainly for Thursday’s meeting.
The early view on consumer prices looks for yet another print within the target range but continuing to run above Banxico’s 3% target.
For more, read Bloomberg Economics’ full Week Ahead for Latin America –With assistance from Anup Roy, Brian Platt, Vince Golle, Monique Vanek, Robert Jameson, Piotr Skolimowski, Mark Evans, Ott Ummelas and Charlie Duxbury.
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