President Donald Trump has landed in Beijing for a high-stakes summit with Chinese President Xi Jinping, a meeting that has gilt yields twitching and the Foreign Office in London burning the midnight oil. The visit, billed as a last-ditch effort to de-escalate trade tensions, comes as the UK finds itself in an unenviable position: caught between its 'special relationship' with the US and its increasingly complex economic ties with China.

Let's cut to the chase. The markets are pricing in volatility. The yield on the 10-year UK gilt has crept up eight basis points this morning, reflecting nervousness about a potential breakdown in talks. Investors hate uncertainty, and this summit is dripping with it. The US-China trade war has already taken its toll on global supply chains, and a failure here could send capital fleeing into safe havens like gold or the Swiss franc.

But the real elephant in the room is Taiwan. Beijing has made no secret of its irritation at US arms sales to the island. Trump, ever the dealmaker, may be tempted to use Taiwan as a bargaining chip for trade concessions. That, to put it mildly, would be a disaster for the UK. Our position on the Taiwan Strait is clear: we support the One China policy. But we also trade heavily with Taiwan, and any US move to weaken its defence would create a vacuum that Xi would be only too happy to fill.

On the trade front, the numbers are stark. US tariffs on Chinese goods have already reduced bilateral trade by 15% year on year. UK exports to China, meanwhile, have held up relatively well, but that's cold comfort if the global economy takes a hit. The Bank of England's latest inflation report warns that a full-blown trade war could push UK inflation above 3%, forcing the MPC to raise rates. That would slash the value of government bonds and hit pension funds hard.

So what can we expect from this summit? Not much, if history is any guide. Trump's negotiating style is all bluster and bottom lines. Xi plays the long game. The best outcome is a temporary truce that buys time for more talks. The worst is a walkout, followed by a new round of tariffs. The UK, for its part, should be preparing contingency plans: diversifying supply chains, boosting exports to other Asian markets, and quietly reminding both sides that we are not to be taken for granted.

In the meantime, keep an eye on the sterling. It's already down 0.3% against the dollar this morning. If the summit ends in acrimony, expect a sharper slide. Capital flight is a real risk. The UK's deficit is still too high to rely on foreign buyers of gilts. We need stability, not brinkmanship. But when has that ever stopped politicians?