Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
U.S. President Donald Trump and China’s leader Xi Jinping are set to begin critical trade talks on Thursday in Busan, South Korea, on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit. U.S. negotiators aim to revive a fragile trade war truce, but significant tensions persist over issues ranging from rare earth minerals and agricultural purchases to fentanyl and the social media app TikTok. This meeting marks their first face-to-face encounter since Trump’s first term, with global businesses closely watching for signs of de-escalation in the ongoing economic rivalry.
Trade War Escalation and De-escalation Efforts
The trade conflict escalated this month after Beijing proposed dramatically expanding curbs on exports of rare-earth minerals, a sector China dominates and vital for high-tech applications. Trump vowed to retaliate with additional 100% tariffs on Chinese exports and other steps, including potential curbs on exports to China made with U.S. software.
Following a scramble between top trade negotiators, U.S. Treasury Secretary Scott Bessent indicated expectations for Beijing to delay rare earth controls for a year. He also anticipated a revival of purchases of U.S. soybeans, critical to American farmers, as part of a “substantial framework” to be agreed upon by the leaders.
Ahead of the summit, China reportedly bought its first cargoes of U.S. soybeans in several months. However, Ryan Hass, a China specialist at the Brookings Institution, observed that both sides remain reluctant to cede control over goods and technologies on which the other depends, suggesting these “chokepoints will remain.”
Key Discussion Points and Trump’s Priorities
Trump has repeatedly expressed optimism about reaching a deal, emphasizing a desire for quick progress. A primary focus for Trump is to reduce U.S. tariffs on Chinese goods in exchange for Beijing’s commitment to curb the flow of precursor chemicals used to make fentanyl, a deadly synthetic opioid that is a leading cause of American overdose deaths.
Additionally, Trump has indicated he might sign a final deal with Xi regarding TikTok, the social media app facing a U.S. ban unless its Chinese owners divest its U.S. operations. China’s foreign ministry spokesperson Guo Jiakun stated Beijing’s willingness to work towards “positive results” in the discussions.
Expiration of Previous Agreements and Market Access Concerns
Previous trade agreements, which significantly reduced retaliatory tariffs and restarted the flow of rare earth magnets from China, are set to expire on November 10. Scott Kennedy, a China economics expert at Washington’s Center for Strategic and International Studies, anticipates a temporary deferral of issues rather than a substantive or long-lasting deal.
Kennedy also noted that the talks are unlikely to address decades-long U.S. concerns about access to China’s markets and overproduction by Chinese industries. For China, he suggested, avoiding these deeper issues could be considered a victory.
Broader Geopolitical Context and Taiwan
The summit unfolds against a backdrop of regional strategic tensions, particularly concerning Beijing-claimed Taiwan, a U.S. partner and high-tech powerhouse. Chinese state media recently reported H-6K bombers flying near Taiwan for “confrontation drills.”
U.S. Secretary of State Marco Rubio advised Taiwan not to be concerned about the U.S.-China talks, despite some experts’ fears that Trump might offer concessions over the island. Alex Gray, White House National Security Council chief of staff during Trump’s first term, dismissed the notion that Trump would abandon Taiwan in favor of a grand bargain with Beijing as a “Washington think-tank fever dream,” asserting that U.S. ties with Taiwan typically expand.
Outlook for U.S.-China Relations
The talks represent a critical juncture for U.S.-China relations, with both leaders navigating immediate trade disputes and deeper structural economic and geopolitical rivalries. While a temporary truce may emerge, experts suggest the underlying tensions and strategic competition between the two global powers are likely to endure, shaping the trajectory of the global economy.
