World

Can Trump and Xi Forge a New Trade Deal? What Kuala Lumpur Talks Reveal

US, China envoys held talks in Kuala Lumpur, aiming for a “productive meeting” to de-escalate trade dispute.

October 26, 2025, 11:32 AM

U.S. President Donald Trump, in a blue suit and red tie, walks across an airfield with a focused expression, an airplane visible behind him.

U.S. President Donald Trump walks across the tarmac at Joint Base Andrews on June 20, 2025. By Brian Jason / Shutterstock.com

Executive Summary

U.S. and Chinese trade envoys concluded discussions in Kuala Lumpur, signaling progress towards a “productive meeting” between President Trump and President Xi Jinping to de-escalate their trade dispute.

President Trump’s Asia tour is expected to culminate in a face-to-face meeting with President Xi on October 30 in South Korea, with the Kuala Lumpur talks crucial for paving the way.

The discussions aimed to avert further escalation of trade tensions, addressing President Trump’s threatened new tariffs and a U.S. tariff investigation, alongside China’s expanded rare earth export controls.

The Story So Far

The current US-China trade discussions are set against a backdrop of a protracted and often volatile trade dispute, characterized by mutual tariffs, export controls, and threats of further retaliation. Despite previous attempts at de-escalation, including fragile truces established earlier in the year, tensions have recently intensified due to new measures by both nations, making the upcoming high-stakes meeting between President Trump and President Xi Jinping crucial for preventing further escalation and potentially extending a temporary resolution.

Why This Matters

The ongoing high-level trade discussions between the U.S. and China are critical as they aim to de-escalate a worsening trade dispute, potentially averting new tariffs threatened by President Trump and addressing China’s rare earth export controls. Success in these talks is essential to pave the way for a productive meeting between President Trump and President Xi Jinping, which could significantly impact the $660 billion bilateral trade relationship and influence broader geopolitical issues such as Taiwan and the Ukraine conflict, though any agreement reached is likely to remain fragile.

Who Thinks What?

U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent express optimism that their discussions with Chinese counterparts are progressing towards a “very productive meeting” between President Donald Trump and President Xi Jinping, aiming to de-escalate the trade dispute.

President Donald Trump’s administration is applying pressure through threats of new tariffs and a tariff investigation into China’s trade deal compliance, while also seeking a face-to-face meeting with President Xi to discuss trade, Taiwan, and potentially China’s assistance with Russia.

China, represented by Vice Premier He Lifeng and chief trade negotiator Li Chenggang, is engaging in discussions to prevent further escalation of the trade conflict and considering an extension of the fragile trade truce, though Beijing has not yet officially confirmed the anticipated meeting between President Trump and President Xi.

KUALA LUMPUR — Top trade envoys from the United States and China concluded a second day of discussions in Kuala Lumpur on Sunday, signaling progress toward a “productive meeting” between President Donald Trump and President Xi Jinping. The talks, held on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit, aim to de-escalate an ongoing trade dispute between the world’s two largest economies.

High-Level Engagement

U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent met with Chinese Vice Premier He Lifeng for their fifth round of in-person discussions since May. Greer expressed optimism, stating, “I think that we’re getting to a spot where the leaders will have a very productive meeting,” as he departed to join President Trump.

China’s chief trade negotiator, Li Chenggang, also participated in the discussions. A broad range of topics were covered, including the potential extension of a fragile truce on trade measures, according to Greer.

Averting Escalation

Both nations are striving to prevent a further escalation of their trade conflict. President Trump had previously threatened new 100% tariffs on Chinese goods and other trade restrictions effective November 1, in response to China’s expanded export controls on rare earth magnets and minerals.

The U.S. also launched a new tariff investigation into China’s compliance with the “Phase One” trade deal signed in 2020, just a day before the current talks commenced. This probe adds to President Trump’s tools against China.

Anticipated Trump-Xi Meeting

President Trump arrived in Kuala Lumpur on Sunday for the ASEAN summit, marking the first stop of a five-day Asia tour expected to culminate in a face-to-face meeting with President Xi in South Korea. A positive outcome from the Kuala Lumpur talks is crucial to paving the way for the high-stakes meeting, currently anticipated for October 30.

While the White House has announced the leaders’ meeting, Beijing has yet to officially confirm it. Potential discussion points between President Trump and President Xi include Chinese purchases of U.S. soybeans, concerns regarding Taiwan, and the detention of Hong Kong media tycoon Jimmy Lai.

President Trump also indicated a desire to seek China’s assistance in Washington’s engagement with Russia, particularly as the conflict in Ukraine approaches its fourth year. U.S. Secretary of State Marco Rubio affirmed on Sunday that the U.S. would not abandon Taiwan for trade benefits with China.

Fragile Trade Truce

Tensions have recently intensified despite a delicate trade truce established in Geneva in May and extended in August. This truce failed to prevent both sides from implementing new sanctions, export controls, and threats of further retaliatory actions.

The current discussions are largely centered on China’s expanded controls over rare earth exports, which have led to a global shortage. In response, the Trump administration is reportedly considering a block on “critical software” exports to China, affecting a range of products from laptops to jet engines.

Outlook

Any agreement reached from these talks is likely to remain fragile, reflecting the complexities of the world’s most significant trade relationship, valued at $660 billion annually.