(Oct 30): Presidents Donald Trump and Xi Jinping agreed to extend a tariff truce, roll back export controls and reduce other trade barriers in a landmark summit on Thursday, potentially stabilising relations between the world’s biggest economies after months of turmoil.
In the first sitdown between leaders since Trump’s return to the White House, the pair agreed China would pause sweeping controls on rare-earth magnets in exchange for what Beijing said is a US agreement to roll back an expansion of restrictions on Chinese companies. The US will also halve fentanyl-related tariffs on Chinese goods, while Beijing resumes purchases of what Trump called “massive amounts” of soybeans, sorghum and other farm products.
The US is also extending a pause on some of its so-called reciprocal tariffs on China “for an additional year”, the Commerce Ministry in Beijing said in a statement, adding that China “will properly resolve issues related to TikTok with the US side”. Trump said he would visit China next April, with Xi planning to head to the US afterwards.
“I guess, on the scale from zero to 10, with 10 being the best, I would say the meeting was at a 12,” Trump told reporters on Air Force One, which he boarded immediately after the meeting with Xi in Busan, South Korea. “You know, just the whole relationship is very, very important. I think it was very good.”
Xi emphasised that dialogue is better than confrontation, calling for more communication between the two sides and cooperation in areas such as trade, energy and artificial intelligence, according to the official Xinhua News Agency.
“Both teams should refine and finalise follow-up work as soon as possible, maintain and implement the consensus, and provide tangible results to reassure the economies of China, the US and the world,” Xinhua cited Xi as saying.
See also: US, China to suspend reciprocal port fees by one year
Equities wavered after the closely watched meeting, with a gauge of Asian shares edging 0.4% lower, while equity-index futures for US stocks swung between small gains and losses.
The outcome is poised to resolve — at least for now — months of trade brinkmanship in which the US and China threatened a series of levies and export controls on their products that had the potential to disrupt global supply chains and hurt the world economy. Still, it falls short of a comprehensive agreement that addresses issues at the heart of the US-China economic competition.
Nvidia chips
See also: US, South Korea finalise deal on investments, lower tariff rate
Despite speculation that Trump might make additional concessions — including the US opening access to Nvidia Corp’s most advanced Blackwell line or changing its policy towards Taiwan — the president indicated that those issues hadn’t been part of the discussions. Trump and Xi did discuss access to some of the chipmaker’s other products, however, with the US president saying he plans to speak with Nvidia chief executive officer Jensen Huang.
The rollback of the fentanyl tariff from 20% to 10% represents a significant victory for Beijing, which should now find its exports more competitive compared with rivals that have enjoyed relatively lower levies. Trump also will not push ahead with a threatened 100% increase in tariffs he had threatened ahead of the talks to impose starting next month.
Trump expressed optimism that the Chinese would ramp up investments in the US and consider additional extensions delaying implementation of their rare-earth policy.
“It’s a one year deal that will, I think, be very routinely extended,” Trump said.
Beijing has used the rare-earth restrictions as a cudgel in the trade talks, threatening to restrict access for US and allied manufacturers to critical minerals necessary for high-tech manufacturing of smartphones, jet engines and other widely used products. Officials in China view the nation’s control over processed rare earths in the same way the US sees its lock on the most-advanced Nvidia chips.
Trump also said Xi would take concrete steps to reduce the flow of precursor chemicals used to create fentanyl.
“I believe he’s going to work very hard to stop the death that’s coming in,” Trump said.
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US Trade Representative Jamieson Greer, speaking alongside Trump, said the US would “postpone” action under Section 301 related to shipping and ports. Earlier this year, the US announced port service fees on Chinese-owned vessels, with the Chinese retaliating later in the year. China also said it would suspend countermeasures against the US for one year related to shipping.
“So that’s no longer an issue,” Trump said.
The president didn’t provide additional details of potential Chinese investments, but said details of the overall pact would be released later. On the resumption of soybean purchases — a political victory that should benefit farmers in his rural base — he said only that “tremendous amounts of the soybeans and other farm products are going to be purchased”.
The US leader also didn’t detail the status of some expected elements of the deal, including approval of the sale of the US operations of ByteDance Ltd’s social video app TikTok. He also didn’t mention if he had agreed to roll back a rule that exposes subsidiaries that are at least 50%-owned by blacklisted firms to the same curbs as their sanctioned parent, which was announced by China after the talks. The regulations have placed due diligence burdens on exporters.
Trump did say the leaders also agreed to work together on Ukraine, but indicated that Beijing had not agreed to his call for countries to cease oil purchases from Russia that helped to bankroll the country’s war effort.
Energy purchases
“We didn’t really discuss the oil,” Trump said. “We discussed working together to see if we could get that war finished.”
Trump added later in a post on Truth Social that officials from the US and China would meet to discuss energy cooperation.
“China also agreed that they will begin the process of purchasing American energy,” Trump said in the post. “In fact, a very large scale transaction may take place concerning the purchase of oil and gas from the great state of Alaska.”
Ahead of the meeting at an air base in Busan, South Korea, on the sidelines of the Asia-Pacific Economic Cooperation summit, both leaders expressed optimism about repairing their economic ties.
“We do not always see eye-to-eye with each other, and it is normal for the two leading economies of the world to have frictions now and then,” Xi said. He added that the two “should stay the right course and ensure the steady sailing forward of the giant ship of China-US relations”.
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