US-China Summit: What future for the trade war?

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In recent days, some details of the expected agreement between the two US-China leaders have been revealed regarding avoiding escalation of tensions. But these are not considered to be terms that can reverse the trade war that President Trump launched in his first term and significantly expanded since returning to power for his second term. According to analysts, regardless of what agreement Mr. Trump and Mr. Xi Jinping reach on the sidelines of the APEC Forum in Gyeongju, there is no doubt that Washington and Beijing will continue to confront each other as the two sides continue to compete for influence in a rapidly changing international order.

According to information revealed by US Treasury Secretary Scott Bessent, he expects China to postpone restrictions on rare earths and in return, the 100% tariffs that Mr. Trump threatened to impose on Chinese goods “will be essentially eliminated.” Mr. Bessent also predicted that the Chinese side will agree to increase purchases of soybeans grown in the United States, increase cooperation with Washington to stop the flow of chemicals used to produce fentanyl, and complete a deal related to TikTok. While these details of the agreement may prevent further escalation of tensions in US-China relations, the basic set of tariffs, sanctions, and export controls that hinder trade and business between the two sides will remain in place.

Looking back, since Washington and Beijing reached a partial truce in their tit-for-tat tariff war in May, the average US tariff on Chinese goods has remained above 55%, while the average Chinese tariff on US products has hovered around 32%. The US has blacklisted hundreds of Chinese companies as national security risks, banning exports of advanced chips and key manufacturing equipment related to artificial intelligence. China, in turn, has added dozens of US companies to its “unreliable entity” list, launched antitrust investigations into leading corporations such as Nvidia and Qualcomm, and restricted exports of more than a dozen rare earth elements and metals, including gallium and dysprosium. It is also a fact that US-China trade cooperation has plummeted since Mr. Trump returned to the White House. China’s exports to the US fell 27% in September, the sixth straight month of declines, even as overall exports rose thanks to expanding trade with Southeast Asia, Latin America, Europe and Africa. Meanwhile, China’s imports of US goods fell 16%, continuing a downward trend since April.

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Analysts say that with the US having no other alternatives to China’s rare earths and minerals in the short term, Washington and Beijing may be able to put aside their differences for a longer period of time than previous trade truces. This means that the “downside risk” in US-China relations will be reduced for at least a year, or longer. But some say that this summit, while it will bring positive “tactical results,” will not be able to mark the end of the Sino-US trade war. That means a comprehensive trade deal is still not possible! Instead, the outcome of this summit is expected to open up further negotiations for a longer-term, more sustainable agreement – ​​if President Donald Trump visits China next year.

This prediction comes from the language that US-China leaders have often used in recent times when talking about the bilateral relationship, showing the big difference between the two sides. While Mr. Trump often complains that the US is being “taken advantage of” by China, Mr. Xi Jinping has repeatedly called for the relationship between the two countries to be defined by “mutual respect” and “win-win cooperation.” Chinese experts also believe that the US should treat China in a way that Beijing considers respectful. Moreover, whether there is a deal or not, the Washington administration understands more than anyone that China still holds a dominant advantage in rare earth minerals. Meanwhile, a series of outstanding issues remain that are difficult to mention frankly – let alone resolve – during the summit in South Korea. These include the trade imbalance, China’s excess production capacity, security in the East Sea or competition in technology.

In fact, both sides are said to not have enough time to negotiate an agreement in this meeting; instead, there will be agreements on smaller packages of issues. The core reason is that both sides still lack trust in each other, always on guard against any unexpected "secret blow" from the other side. That stems from the long-standing systemic contradictions between China and the US that have not been resolved. There are even concerns that if the two US-China leaders do not prepare carefully both mentally and with bargaining chips, the relationship between the two sides will heat up again; and then it will be difficult to control and "will even get worse". The most important thing is that China's power is said to be increasing and with many outstanding advantages, it is not impossible that it will surpass the US in the future!