Expectations of US-China trade war truce
US President Donald Trump and Chinese President Xi Jinping met in South Korea, raising hopes of a trade deal to ease tensions between the world's two largest economies.
President Donald Trump has begun a meeting with President Xi Jinping at an air base in the South Korean port city of Busan, the first face-to-face meeting between the two leaders since 2019.
The US president appeared optimistic that the two sides could reach a trade truce, although he admitted that “Xi Jinping is a very tough negotiator.”
The meeting comes after Mr Trump's whirlwind tour of Asia, where he announced trade advances with Japan, South Korea and Southeast Asian nations.
During the talks, President Xi Jinping said through an interpreter that it was normal for the world's two largest economies to have occasional conflicts, but affirmed that China was willing to work with the US to build a more stable foundation for bilateral relations. Earlier, the two sides' negotiating teams had reached "basic consensus" on handling each other's main concerns.
News of the meeting sent the yuan to its highest level in nearly a year, while global stocks from New York to Tokyo hit record highs, reflecting hopes of a thaw in the trade war.
The trade war was reignited earlier this month when Beijing proposed expanding restrictions on exports of rare earths, materials vital for high-tech industries. In response, Mr. Trump threatened to impose 100% tariffs on Chinese goods and restrict exports of products containing American software to the country.
Ahead of the conference, US Treasury Secretary Scott Bessent said he expected China to delay rare earth controls for a year and resume imports of US soybeans, an important step for US farmers.
Trump has said he would like to reduce tariffs on Chinese goods if Beijing commits to controlling the supply of precursor chemicals used to produce fentanyl, a synthetic drug that has caused tens of thousands of deaths in the US. He has also mentioned the possibility of signing a deal with TikTok, the Chinese social media app that is under threat of being banned in the US if it does not separate from its original owner.
Interim agreements on tariffs and rare earths, which have significantly reduced retaliatory tariffs between the two countries, are set to expire on November 10. Washington is considering easing some of them in exchange for Beijing’s cooperation in combating fentanyl trafficking.
Although Mr. Trump hopes to make concrete progress soon, observers say the path to a sustainable trade agreement still has many obstacles.
The world’s two largest economies are competing fiercely not only in trade but also in technology and geopolitical influence. However, the meeting in Busan is seen as the first positive signal, opening up an opportunity to cool down the US-China trade war.