Economy

Trump’s Trade Gamble: Will Talks in Malaysia De-Escalate US-China Tariff War?

US & China to hold trade talks in Malaysia to de-escalate tariffs. Trump eyes meeting Xi in November.

byEditorial Staff

October 18, 2025, 11:23 AM

The Kuala Lumpur, Malaysia skyline at sunset, featuring the illuminated Petronas Twin Towers and the KL Tower against a vibrant sky.

The stunning Kuala Lumpur skyline, with the Petronas Towers and KL Tower, glows at sunset. By MDL.

Executive Summary

The United States and China are scheduled to hold new trade talks in Malaysia next week to prevent further tariff escalation, with US Treasury Secretary Scott Bessent meeting Chinese Vice Premier He Lifeng.

President Trump acknowledged that current US tariffs on Chinese goods are “unsustainable” and plans to meet Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in November.

The upcoming talks follow recent heightened trade tensions, including China’s expanded export controls on rare earths and Trump’s threats of retaliatory tariffs and US export controls on critical software.

The Story So Far

The upcoming trade talks between the US and China are driven by persistent, high-level trade tensions, including a current 157% US tariff rate on Chinese goods that President Trump has acknowledged as “unsustainable.” These discussions are critical as a prior tariff truce is set to conclude, and recent actions, such as China’s expanded export controls on rare earths and President Trump’s threats of new retaliatory tariffs, underscore the urgent need to de-escalate tensions and stabilize economic relations.

Why This Matters

The upcoming trade talks in Malaysia and the planned meeting between President Trump and President Xi signal a critical effort to de-escalate trade tensions, acknowledging the current 157% tariffs on Chinese goods as “unsustainable.” This push for negotiation aims to stabilize global supply chains, which have been severely disrupted by tariff disputes and China’s expanded export controls on vital rare-earth elements, potentially impacting the cost and availability of technology manufacturing components globally.

Who Thinks What?

President Donald Trump acknowledged current US tariffs on Chinese goods are “unsustainable,” stating China “forced” his administration to impose them, while also threatening retaliatory 100 percent tariffs on imports and planning to meet President Xi Jinping.

China, represented by Vice Premier He Lifeng, described recent discussions as “candid, in-depth and constructive,” agreeing to resume trade negotiations promptly, while also expanding export controls on the critical rare earths industry.

US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer criticized China’s rare earth restrictions as a threat to global supply chains but are actively engaging in renewed trade discussions to prevent further tariff escalation.

The United States and China are set to hold a new round of trade talks next week in Malaysia, aiming to prevent a further escalation of tariffs between the world’s two largest economies. The announcement comes as President Donald Trump acknowledged that current US tariffs on Chinese goods are “unsustainable” and revealed plans to meet Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea in November.

Upcoming Trade Discussions

US Treasury Secretary Scott Bessent confirmed his expectation to meet Chinese Vice Premier He Lifeng in Malaysia next week. This follows a video call between the two officials on Saturday, which Chinese state media Xinhua described as “candid, in-depth and constructive,” with both sides agreeing to resume trade negotiations promptly. US Trade Representative Jamieson Greer also participated in the call.

Trump’s Stance on Tariffs

In an interview with Fox Business, President Trump defended his administration’s decision to impose tariffs, stating, “It’s not sustainable, but that’s what the number is… They forced me to do that.” This remark addresses the cumulative 157% tariff rate on Chinese goods, a figure that has raised questions about its potential impact on the US economy.

Recent Trade Tensions and Strategic Materials

The upcoming talks and President Trump’s comments follow a period of heightened trade tensions. Last week, China expanded its export controls on the critical rare earths industry, prompting President Trump to threaten retaliatory 100 percent tariffs on imports from the Asian nation. Earlier, Secretary Bessent and US Trade Representative Jamieson Greer had criticized China’s restrictions, labeling them a threat to global supply chains.

China holds a dominant position in rare-earth elements, which are vital for technology manufacturing. In response to China’s actions, President Trump has also threatened to impose new US export controls that would halt the supply of “any and all critical software.”

Context of Prior Agreements

These developments occur as a previous tariff truce, which had scaled down duties for both countries from triple-digit marks, is set to conclude on November 10. Over the past six months, Secretary Bessent and Vice Premier He Lifeng have met in four European cities to establish this initial agreement.

Outlook

The forthcoming discussions in Malaysia and the planned meeting between President Trump and President Xi highlight ongoing efforts to navigate complex trade relations. Both nations appear to be seeking pathways to de-escalate tensions and stabilize economic ties amidst significant tariff disputes and strategic industry controls.