Trump, Xi Kick Off Pivotal Trade Talks At South Korea Summit

US President Donald Trump said he and Chinese President Xi Jinping would have "a very successful meeting" on Thursday to quell an expansive trade fight that has shaken global markets.The leaders shook hands as they met at an air base in Busan, on the sidelines of the Asia-Pacific Economic Cooperation summit in South Korea."I think we've already agreed to a lot of things, and will agree to some more right now," Trump said. He labeled Xi a "very tough negotiator" but also "a great leader of a great country."

"I think we're going to have a fantastic relationship for a long period of time," Trump said.Xi told Trump he felt "very warm seeing you again" and said he was "ready to continue working with you to build a solid foundation for China-US relations.""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. "And in the face of wind, waves and challenges, you and I, at the helm of Chinese relations, should stay the right course and ensure the steady sailing forward of the giant ship of China-US relations."

Xi and Trump are expected to hammer out the details of a framework agreement, negotiated over the weekend in Malaysia, that would see the Chinese pause a rare-earths licensing regime for at least a year and resume soybean purchases in exchange for lower US tariffs."Our two economic and trade teams reached basic consensus on addressing our respective major concerns and made encouraging progress," Xi said. "This provided the necessary conditions for our meeting today."

Xi also praised Trump's efforts to resolve global conflicts, including in Gaza and Southeast Asia, and said the two nations can "jointly shoulder our responsibility as major countries and work together to accomplish more" in pursuit of peace.While Trump predicted Wednesday that the talks could last three to four hours, the White House's official schedule blocked off less than two hours for the gathering. The outcome is poised to resolve, at least for now, months of trade brinkmanship in which the world's two largest economies have threatened a series of levies and export controls on their products.

Still, it's likely to fall short of a fulsome agreement that addresses issues at the heart of the US-China economic competition.Details of the framework deal have trickled out in the days since the Malaysian summit, and suggest Xi may have won important tariff relief in exchange for temporary concessions.Trump on Wednesday predicted that he would reduce the 20% tariff he placed on Chinese goods over exports of fentanyl precursor chemicals, suggesting Beijing may be able to secure a rate of duty on many goods that keeps the country competitive with other regional manufacturing rivals.

That reduction would come in addition to the US scrapping plans for a 100% tariff Trump had threatened to implement on Nov. 1, as well as export controls on a broad swath of critical software. Trump's administration is expected to roll back levies and fees hitting Chinese ships. The president has also hinted he'd likely abandon a probe into whether China was abiding by a broader trade deal from his first term.The Chinese are also planning to push for Washington 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. The regulations have placed due diligence burdens on exporters.

And, Trump on Wednesday suggested he'd be willing to discuss access to Nvidia Corp.'s flagship Blackwell AI processor, which would represent a major concession that may anger national-security hawks in Washington.The major concession from the Chinese side is a promise to delay an expanded rare-earths licensing regime for at least a year, with a pledge to reevaluate the program during that period. Beijing has used the 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.

China is also resuming soybean purchases, with the country booking shipments for at least two cargoes of the American crop, its first known purchase this season, according to people familiar with the matter. That provides a political victory for Trump, who has seen farmers in his political base suffer as they have been unable to offload an agricultural glut.Xi is also expected to approve the sale of the US operations of ByteDance Ltd.'s TikTok social video app to a consortium put together by the Trump administration. Trump has credited the app with boosting his appeal with young voters and helping return him to the White House.

Trump is also expected to pressure Xi to curtail support for Russia's war in Ukraine, with US officials describing plans to discuss a global peace accord. Washington may ask Beijing to curtail the sale of so-called dual use items. Trump highlighted recently a drop in Chinese purchases of Russian oil that followed US sanctions on Russian firms.But few expect serious intervention from the Chinese, who have sidled closer to Moscow since the invasion of Ukraine.

Trump, for his part, signaled a determination ahead of the meeting to take the issue of Taiwan off the table, even after saying recently that for Xi, the self-governing island is the "apple of his eye." China has sought an official US declaration that it "opposes" Taiwanese independence, rather than simply saying American officials "do not support" such a move.

Source: Bloomberg Europe