President Donald Trump heads to Beijing later this week to meet with Chinese President Xi Jinping at a time when America is fighting a war with Iran and tussling over tariffs with its major trading partners.
Trump visits China, a country that maintains a critical economic relationship with the U.S., as China is flexing its muscles internationally while America is turning inward. It is also a moment when Trump’s own political standing is in question, with concerns over his health and the GOP facing a potential loss of the House in the midterm elections.
The Chinese have positioned themselves as an alternative to the U.S.-dominated international order, building up economic and military relationships throughout Asia and Africa.
Before Trump leaves, however, there is likely to be continued bad news on inflation, a top domestic concern for voters who have soured on Trump’s tariffs and international forays.
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The consumer price index for April is set to be released on Tuesday with forecasts it could hit 3.7% annually, the highest level since Trump took office in 2025. Core CPI, stripping out energy and food costs, is expected to reach 2.7%. Both would be well above the 2% target the Federal Reserve sets as its goal.
That has hamstrung the Fed, now with a new chairman in Kevin Warsh, amid Trump’s repeated calls for lower interest rates.
Wednesday will bring another inflation check, this time the producer price level that measures inflation at the wholesale level. That is also expected to show a gain over March.
“This week’s CPI release is forecast to show headline inflation rose toward 4% in April and reached the highest in nearly two years, pushed up by higher gas prices,” Comerica Bank Chief U.S. economist Bill Adams wrote on Monday.
Gas prices have hit $4.50 a gallon on average, forcing Americans to cut back on purchases of other items. Meanwhile, the price of a barrel of oil is now $104, down from peaks seen earlier since the conflict in the Middle East began in late February, but well above where it had been trading before the U.S. and Israel began bombing Iran.
Both sides have traded peace proposals, with Trump branding the latest offer from Iran as “unacceptable.” But hostilities have been limited of late to isolated skirmishes in and around the Strait of Hormuz.
Just how consumers are holding up will be seen in the retail sales report for April, with experts anticipating a drop in activity – especially when spending on gasoline is excluded. There were positive reports on the labor market last week, and corporate earnings have come in strong even as firms pay more for their imported supplies.
“Up to now, the supply disruptions across Europe and North America have been relatively limited; however, falling oil inventories and jet fuel shortages will increasingly start to bite,” William Blair macro analyst Richard de Chazal wrote Monday. “Companies are already facing cost pressures, some of which are being offset with productivity increases, but consumers will face higher prices if greater shortages emerge.”
Iran is expected to be a hot topic of discussion between the two leaders when they meet in Beijing. Whether the two presidents can make progress on that subject could be key to how long the conflict lasts – and how much of a shadow it will cast over the global economy in 2026.
