CNBC's The China Connection newsletter: Tariffs eased. Trust didn't.

• AI Speech co-founder says tariffs and market access remain top concerns, but branding is the bigger challenge for U.S. expansion; the company is exploring acquisitions and local hiring strategies
• Humanoid robot startup Zeroth is in talks with Best Buy and Target for fall 2026 U.S. launches, while considering Texas manufacturing to reduce tariff exposure
• Companies are addressing data security proactively: AI Speech emphasizes its products don't upload user data and uses international data centers for U.S. customers who opt for AI features

Summary: U.S.-China Trade Relations Show Cautious Progress Post-Trump-Xi Summit

Key Developments

Following the Trump-Xi summit earlier this month, U.S.-China trade tensions have eased with tariffs stabilizing around previously elevated levels after cumulative duties had spiked significantly. Both nations agreed to pursue cooperation and establish trade and investment boards focused on non-sensitive sectors.

Company Activity

Chinese technology firms are actively pursuing U.S. expansion despite lingering challenges:

• AI Speech (high-end microphones/speakers): Co-founder Zou Ping reports revived discussions with U.S. retailers, exploring acquisitions and local hiring, with potential talks involving New York retailer B&H. The company addresses data security concerns by not uploading user data and using international data centers.

• Zeroth (humanoid robotics): CEO Guo Renjie claims strong orders from January's Consumer Electronics Show, planning U.S./Europe sales starting fall 2026. In discussions with Best Buy and Target; considering Texas manufacturing to mitigate tariff risks.

• Hua Hong (semiconductor): China's second-largest chip foundry reports full capacity utilization driven by AI, industrial, and automotive demand, with momentum expected through 2026.

Market Implications

While tariff reductions have reopened dialogue, branding and data security remain greater obstacles than tariffs for Chinese companies entering U.S. markets. Chinese investment in the U.S. has declined significantly, though state-level engagement continues through programs like the Washington State-Chongqing sister cities partnership.

The "more positive tone" in working-level discussions suggests extended stability for 3-5 years, encouraging companies to pursue opportunities in "the world's two largest consumer markets." However, concerns about data sovereignty and brand perception continue shaping expansion strategies, with firms emphasizing local manufacturing and data localization to address these hurdles.