Mid-Week Briefing: What must the US do to prevent losing to China in the manufactured “AI race”?

The United States may need cooperation, not escalation, to prevent losing ground to China in the manufactured “AI race.”

Ahead of this week’s meeting between President Trump and President Xi Jinping, reports suggest both countries may pursue narrow safeguards around AI cybersecurity, data leaks, and national security. Neither side wants to slow technological progress, but both appear increasingly willing to address shared risks.

That potential cooperation follows constructive discussions on AI, trade, and investment—and could help stabilize U.S.–China relations. At the same time, a possible reopening of the Strait of Hormuz would ease another major source of geopolitical and market uncertainty.

Together, these developments are increasing the probability of a “Santa Trump” rally. However, investors should not confuse a promising right-tail scenario with a guaranteed outcome.

Markets can move quickly as geopolitical probabilities change. That is why 42 Macro relies on a systematic, data-driven process to separate signals from noise and help investors adjust portfolio risk as conditions evolve.

Explore systematic 42 Macro research solutions to protect your portfolio.

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