With Xi due to arrive in D.C. this week, let's revisit the May meeting and what has happened between then and now.

Remember, the May meeting was supposed to take place in April. It was pushed "5-6 weeks" on the condition that China help unblock Hormuz. That didn't happen.

Still, Trump went to Beijing, and with a large delegation that included Jensen Huang and Elon Musk. He posted that his very first request would be for Xi to "open up" China.

"Opening up" China has been the false promise of the past few decades. 

It hasn't happened. The result has been a Chinese economy that grew 50x in 35 years while ours grew 5x. It was a transfer of wealth and power, built on a cheap currency, an export monopoly, and the recycling of American consumer dollars into Treasuries so Americans could buy more cheap stuff.

"Opening up" China would require Xi to abandon the economic model that made China a superpower. Not going to happen.  

So, what came out of Beijing?

On paper: a Chinese commitment to buy $17 billion a year of American agriculture through 2028, an order for 200 Boeing jets, a new "Board of Trade" for non-sensitive goods, and a promise to "address" American concerns on rare earths.

The White House announced the $17 billion. Beijing's commerce ministry confirmed only that it would "expand agricultural trade broadly." No number.

Not on paper was the H200 chips, Taiwan, Iran, Hormuz. And on the November trade truce, Bessent said afterward that the U.S. was "not in a rush to extend" it.

That was May. And Trump invited Xi to Washington for September, before the truce expires on November 10.

So, Xi is due. What has happened between the two meetings?

As Bessent reported this morning in a CNBC interview, China's deliverables from the last meeting "have not been completely fulfilled." 

And the leverage has shifted.

This time Xi comes to Trump, on American soil. 

The U.S. has increased its control over global oil supply.

The dollar has been reaffirmed as the center of the global financial system. The new stablecoin framework creates a new source of demand for dollar assets and Treasury securities.

And the "isolate China" endgame that we've talked about since early last year, now looks to be in-motion.

The Trump administration launched Economic Outcast in late August, a program that has removed banks from the dollar system for handling Iranian money, but for now with an obvious name unspoken.

The operation itself is actually called Economic Outcast. 

And then, earlier this month, at a G20 hosted by the United States, nineteen members put their names to a document about repairing global trade imbalances, and China sat alone on the other side of it.

The "isolate China" pieces seem to be moving into place.

That said, in dealing with China, the plan thus far has been preserving stability. Bessent said as much in a CNBC interview this morning.

Maintaining stability buys time to continue working toward the endgame.

What's the sequencing to the endgame?

You don't isolate the second largest economy in the world by yourself. You do it by realigning everyone else first, then China is left standing alone.

As we discussed in February of last year, two weeks into Trump 2.0, the tariffs were never about revenue. They were about realignment – away from China's influence, and back toward the U.S.

The U.S. has the one thing every export economy on earth needs, the American consumer. Country after country came back to the table on those terms. China didn't, not surprisingly. China retaliated, built workarounds, and stalled.

The Western Hemisphere: Trump has taken back the shipping lanes (Panama and Greenland), removed China's operational partners (Venezuela and Cuba), and realigned much of the rest of the hemisphere with economic leverage (tariffs). This was mostly done inside a year.

Then Middle East: He's removed a hostile regime, and taken its oil out of the hands of the people who used it to fund chaos. And Iran's oil goes to China through a strait which is now administered by the U.S. Navy. Control the chokepoint and you control who gets energy and at what price. That's leverage over China.

And Europe: European leaders weren't interested in realigning with a new American administration that was reversing the climate and social agenda. But realignment can come when economic, defense and energy security is leveraged against them. With that, it's now showing up for European voters in the gas bill. It's showing up in the bond market. And it's now showing up in the ballot box (political change).

Then China: Isolation. The model is on display against Iran right now: every bank, shipper, insurer and buyer that finances the target is told to choose between China and having access to the dollar system.

Where are we on the Western Hemisphere map?