Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
President Donald Trump’s recent tour of Asia concluded with a highly anticipated meeting with Chinese President Xi Jinping on the sidelines of the annual Asia-Pacific Economic Cooperation (APEC) summit in South Korea. The discussions led to a temporary de-escalation of trade tensions, with the US agreeing to lower tariffs in exchange for China’s commitment to crack down on fentanyl-related chemicals and purchase “tremendous amounts” of US soybeans. Trump departed before the main leaders’ meeting, casting a shadow of uncertainty over the sustainability of the newly brokered truce.
US-China Trade Dynamics
The agreement between the US and China marks a pause in an ongoing trade dispute that has seen both nations impose escalating tariffs. While details of the meeting yielded no major surprises, the US concession on tariffs and China’s commitments signal a temporary detente. Bonnie Glaser, managing director of the German Marshal Fund’s Indo-Pacific Program, noted that US-China relations are expected to remain intensely competitive, urging countries to prepare for potential renewed friction.
Trump’s second term began with the imposition of “reciprocal” tariffs on various countries, including allies, which complicated long-term planning for global supply chains. Competition with China has consistently been a focal point of US trade policy since Trump’s first term. Beijing has learned to counter these pressures, with past flare-ups involving threats of high tariffs and restrictions on critical rare-earth minerals, which nearly derailed the recent talks.
Despite the current “one-year truce,” the economic landscape remains volatile, largely due to Trump’s unpredictable policy shifts. Alison Szalwinski, vice president and China adviser at The Asia Group, suggested that Washington’s tumultuous trade negotiations have led many Asian allies to question whether the US views economic integration as a strategic asset or merely a bargaining chip.
APEC’s Evolving Role
APEC, founded in 1989 to promote open trade and economic cooperation, has historically played a crucial role in regional integration, including facilitating China’s entry into the global economic system in 1991. China’s participation in APEC pushed it towards market-oriented reforms and regulatory modernization, preceding its 2001 membership in the World Trade Organization (WTO).
However, in the current tense geopolitical climate, forums like APEC are finding it increasingly difficult to achieve multilateral outcomes. Andrew Yeo, senior fellow at the Brookings Institution’s Center for Asia Policy Studies, observed that this has contributed to the marginalization of large summits in favor of smaller, bilateral meetings on the sidelines.
Bilateral Deals and Regional Hedging
Ahead of the APEC summit, Trump secured significant deals with Japan and South Korea, totaling approximately $900 billion in investment into the US economy in exchange for tariff relief. These agreements, covering sectors such as energy, artificial intelligence, and critical minerals, somewhat diminished the broader APEC summit’s prominence, especially with Trump’s early departure.
Asian middle powers, such as South Korea and Japan, are navigating a complex environment, balancing trade negotiations with Washington while managing economic exposure to Beijing. Patricia Kim, a Brookings Asia fellow, noted that these governments are increasingly hedging rather than leading. Jeremy Chan, a senior analyst at Eurasia Group, highlighted that despite new trade deals, the share of Korean and Japanese exports to the US is falling, and neither country is relying on multilateral institutions like the WTO or APEC to resolve trade issues with the US.
Amid this uncertainty, diplomatic engagement between South Korea and Japan is intensifying, reflecting a shared need for regional cooperation. Chan indicated that relations between Seoul and Tokyo have improved, with both facing similar challenges in managing trade and investment agreements with the US without harming security ties. This trend suggests that in a world where the US is perceived as less reliable, Japan and Korea are increasing their interdependence.
Multilateralism’s Continued Relevance
Despite the shift towards bilateral and “minilateral” arrangements, large forums like APEC continue to provide essential platforms for dialogue. Even with Trump’s early departure from the main summit, APEC served as a neutral venue for the critical US-China meeting, facilitating tentative steps toward de-escalation, including plans for further talks in 2026. President Xi reportedly emphasized to Trump the importance of avoiding a “vicious cycle of retaliation.”
Szalwinski concluded that while uncertainty is eroding confidence in multilateralism, it is not necessarily leading to its demise. These forums remain important for facilitating crucial discussions and managing complex international relations.
