Trump and Xi Launch Crucial Trade Talks in South Korea Amid Tentative Breakthroughs

Gerik

Summary:

Presidents Trump and Xi Jinping commenced a high-stakes meeting in Busan, South Korea, aiming to finalize a framework that includes tariff relief, delayed Chinese export controls..

Renewed Dialogue After Prolonged Tensions

In a carefully choreographed summit in Busan, Presidents Donald Trump and Xi Jinping signaled cautious optimism as they began what may prove to be a pivotal round of trade negotiations. Meeting on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit, both leaders struck a conciliatory tone, suggesting the groundwork for a limited agreement had already been laid in previous talks, including a quiet diplomatic session in Malaysia over the weekend. The public remarks underscored a shared interest in de-escalating a trade confrontation that has reverberated through global markets for months.

The proposed deal reportedly includes multiple short-term concessions designed to defuse immediate trade threats. China is expected to pause a controversial rare-earth licensing regime for at least one year, resume American soybean purchases, and advance commitments to reduce fentanyl exports, a substance tied to the U.S. opioid crisis. In exchange, the United States will roll back several tariffs and export controls, including scrapping a planned 100% tariff hike originally scheduled for November 1.

Trump also hinted at a reduction in the 20% tariff imposed on Chinese goods tied to fentanyl precursor chemicals and signaled openness to revisiting a rule that penalizes subsidiaries of sanctioned Chinese firms. This suggests a partial thawing of the technology and defense-related export policy landscape, potentially opening space for deeper commercial reengagement.

Tariff Relief and Semiconductor Access on the Table

One of the most contentious developments involves Trump’s apparent willingness to discuss Chinese access to Nvidia’s Blackwell AI processor, a high-performance chip used in advanced computing. This signals a potential policy shift, as Washington has previously restricted exports of such chips due to national security concerns. If confirmed, such an offer could provoke political backlash from security-focused lawmakers, highlighting the delicate balance between commercial diplomacy and strategic containment.

China’s rare earth export restrictions have been one of the sharpest points of leverage in the trade standoff. A temporary suspension of Beijing’s expanded licensing framework as included in the draft agreement would offer immediate relief to U.S. manufacturers dependent on critical inputs for everything from jet engines to green energy systems. However, this move is more tactical than structural: it defers rather than resolves the long-term issue of global rare earth dependency on China.

The agreement’s provision for renewed Chinese soybean purchases carries significant political weight for Trump. The agricultural sector, particularly in key electoral states, has borne the brunt of retaliatory Chinese tariffs. The resumption of at least two large soybean cargoes this season could serve as a symbolic win for Trump’s domestic base, offering economic relief while reinforcing his image as a trade negotiator.

TikTok, Taiwan, and the Technology Front

Among the softer concessions, Xi is expected to greenlight the U.S. divestiture of TikTok from parent company ByteDance, enabling Trump to take credit for curbing Chinese tech influence while maintaining appeal among younger voters. On Taiwan, Trump appears ready to sideline the issue, a move that reflects both diplomatic pragmatism and his effort to preserve the current détente. China continues to press for a stronger U.S. stance against Taiwanese independence, though substantive U.S. policy shifts remain unlikely.

The summit’s extensive delegations suggest broad institutional involvement from both sides. Trump was accompanied by top officials including Trade Representative Jamieson Greer and Secretary of State Marco Rubio, while China fielded senior figures like Vice Premier He Lifeng and Foreign Minister Wang Yi. This level of participation implies both countries are treating the summit as more than symbolic, it is a testing ground for restoring functional diplomacy.

Structural Issues Remain Unresolved

Despite the productive tone, fundamental frictions including industrial subsidies, intellectual property rights, and broader technology competition remain largely untouched in this round. Analysts caution that this framework deal is better interpreted as a ceasefire than a reconciliation. It offers temporary relief, but not a resolution to the structural decoupling already underway between the two economies.

The Trump-Xi summit in Busan has opened a pathway toward trade stabilization, anchored by provisional agreements on rare earths, agriculture, and tariffs. Yet the underlying rivalry strategic, technological, and ideological persists. While both sides are signaling cooperation, the scope of concessions and the absence of resolution on core structural issues indicate that this is an interim arrangement shaped more by political necessity than long-term strategic convergence. The coming months will test whether this fragile truce can evolve into sustained, enforceable progress or dissolve under the weight of enduring mistrust.

Source: Bloomberg

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