Trump-Xi Summit: Leaders Agree To Dial Back Trade Tensions

On Oct. 30 US President Donald Trump and Chinese counterpart President Xi Jinping met on the sidelines of the APEC forum in Busan, South Korea. It was their first in-person meeting since 2019 and resulted in a one-year trade truce that temporarily eased tensions between the world's two largest economies, though fundamental issues remain unresolved.

Trump said after the nearly two-hour meeting that it was "friendly" and that he and the Chinese leader "agreed to almost everything".  Trump told reporters that "on a scale from zero to 10, with 10 being the best, I would say the meeting was a 12," adding that "it was an outstanding group of decisions I think that was made."  In response to the meeting, Beijing released its own statement, where Xi said China and the US should not get "caught in a vicious cycle of mutual retaliation".

In response to Chinese efforts to curb the flow of fentanyl precursors, Trump announced a cut in the "fentanyl tariff" on Chinese goods from 20% to 10%, which lowered the overall US tariff rate on Chinese imports from 57% to 47%.

The fentanyl precursors issue has created tension in US-China relations.  The core of this issue is the American opioid crisis, which has led to tens of thousands of overdose deaths.  Fentanyl is an opioid drug, like morphine or heroin. It is made entirely in laboratories, with no natural ingredients. Although it is approved as a prescription pain medicine, most of the fentanyl contributing to the current overdose crisis is made illegally. 

China is a primary source of the precursor chemicals required to manufacture fentanyl. In fact, Chinese chemical companies manufacture and export nearly all of the illicit fentanyl precursors used globally. The US has accused China of not doing enough to stop this flow. China has now assured the US that it would increase efforts to stop the flow of fentanyl precursor chemicals.

China agreed to immediately resume and increase purchases of American soybeans, corn and other agricultural products. These are important to Donald Trump due to their political significance in key agricultural states such as Iowa, Ohio, and Wisconsin, which have been a crucial part of Trump's voter base.  China's large pig and chicken farming operations create a huge demand for soybeans and corn, but due to tensions over tariffs, China has significantly reduced or stopped its purchases of US corn and soybeans. China had instead turned to suppliers in South America, such as Brazil and Argentina, to meet its needs. This resulted in a sharp drop in US exports and created financial hardship for American farmers.

China's decision to resume soybean and corn purchases from the US is a relief for the Trump administration and for American farmers, as it represents a potential de-escalation of trade tensions and a boost for agricultural exports. Trump hailed the move as a "very nice gesture" and part of a deal with Xi Jinping to buy "tremendous amounts" of agricultural products. 

China also agreed to postpone new export restrictions on its rare earth metals for one year, providing a crucial—if temporary—win for the US, which heavily relies on these minerals for advanced technology and defence. It may be recalled that China had announced new export controls on a range of strategic materials, including expanded restrictions on rare earth elements, superhard materials, and high-performance lithium battery components.  These are crucial for advanced technologies and defence. 

After the Trump-Xi meeting, the two sides agreed to suspend the special port fees targeting each other's vessels for one year.  Earlier this month, the US and China began imposing reciprocal maritime port fees on each other's vessels. These reciprocal maritime fees had also escalated tensions.

The two sides agreed to work towards properly resolving issues related to the social media app TikTok.  The TikTok issue between the US and China is primarily a conflict over national security, centred on concerns that China's government could access American user data or influence the platform's powerful recommendation algorithm through TikTok's Chinese parent company, ByteDance. This has led to a US law mandating ByteDance to divest its US operations, though a recently finalised deal aims to resolve this by creating a US-controlled entity with US investors taking a majority stake. 

China has opposed U.S. attempts to force the sale of TikTok, viewing such actions as "bandit logic" and an unfair suppression of Chinese enterprises. Despite its opposition, China has indicated it will work with the US to resolve the issue. 

Following the Trump-Xi meeting, the US suspended new restrictions on Chinese subsidiaries from acquiring American technology for one year.  Trump confirmed that Nvidia's most advanced "Blackwell" AI chips were not part of the concessions that would allow sales to China.

The agreements between Trump and Xi are a partial freeze that lowers the temperature on escalating trade hostilities, which have been fuelled by tit-for-tat tariffs throughout 2025. The truce is temporary, leaving open the possibility of renewed escalation.  However, the agreements provide domestic political advantages for both leaders. For Trump, the deal delivered tangible results on trade and the opioid crisis. For Xi, it showed that China would not be "bullied" and could achieve concessions.

The outcome of the Oct. 30, meeting between Donald Trump and Xi Jinping is expected to have a complex impact on India.  While the bilateral trade truce between the U.S. and China may ease some global economic uncertainty, it also places India at a new, and potentially less favourable, economic and geopolitical crossroads.  The US has reduced tariffs on Chinese goods, but not on Indian goods. This places India at a trade disadvantage. India and Brazil now face the highest US tariffs among major trading partners. The tariff disparity is likely to increase pressure on India to negotiate a trade deal with the US.

In conclusion, while a temporary agreement was reached through the Trump-Xi talks, the fundamental competitive dynamics remain. This suggests that periods of tension and de-escalation are likely to characterise the relationship for the foreseeable future. The future of US-China relations is likely to be a complex mix of continued strategic competition and a pragmatic search for stability and cooperation on select issues like fentanyl control. While both nations recognise the need for a steady relationship, they will continue to face fundamental differences and mistrust, especially concerning economic models and China's growing global influence.

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