Trump, Xi Set to Formalize Trade Truce After Months of Chaos
Pact Could See a Rollback of Some Tariffs, Fees and Export Restrictions
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Donald Trump and Xi Jinping are set to finalize a détente as they meet Oct. 30 in South Korea, putting the world’s biggest trade fight on hold — at least for now.
Initial signals indicate the leaders are readying a pact that could see a rollback of some tariffs, fees and export restrictions threatened or implemented in recent months. That includes a reduction in U.S. duties linked to fentanyl, approval of the sale of TikTok’s U.S. operations, soybean purchases and a deal to halt measures including China’s sweeping plan to require licenses for goods with even a trace amount of its rare earths.
The moment is a watershed — for the global economy, markets and companies that rely on trade as well as for key sectors, such as semiconductors and shipping, that have become bargaining chips in the broader conflict. Still, the outcome looks more like a temporary pause in hostilities rather than a durable agreement that will alter the trajectory of a managed decoupling of the world’s two leading economies.
“This is a short-term truce rather than a long-term solution,” said Zack Cooper, a senior fellow at the American Enterprise Institute focused on Asia and a former U.S. official. “We’ll see Trump and Xi agree to the framework for a future deal that the two sides negotiated in Malaysia, but I don’t expect that this will resolve the trade issues.”
"Bringing back Trillions of Dollars to USA! A great trip. Dealing with very smart, talented, and wonderful Leaders. Tomorrow, President Xi of China. It will be a great meeting for both!!!" - President Donald J. Trump — The White House (@WhiteHouse)
The two leaders will meet at 11 a.m. local time in Busan, South Korea, the White House said, their first in-person discussion since Trump returned to office in January. A previous White House schedule listed the location at a nearby city hosting the Asia-Pacific Economic Cooperation summit.
The last nine months have been turbulent, with Trump at one point raising tariffs on Chinese products to 145% and Beijing cutting off supplies of rare-earth magnets used to make high-tech goods including fighter jets, smartphones and wind turbines.
A series of meetings by negotiators since then has produced a shaky truce marked by persistent misunderstandings, tit-for-tat punitive actions and threats of escalation. Yet talks in Kuala Lumpur last weekend appeared to provide a breakthrough, as both sides sought to buy time and stabilize the relationship to avoid the prospect of suffering more painful economic damage.
Donald Trump and Xi Jinping. (Bonnie Cash/UPI; Oliver Bunic/Bloomberg)
Investors in both countries have cheered the positive signs, with the S&P 500 surging to new highs and benchmarks in China also enjoying gains. A centerpiece of the deal is expected to be significant relief from the first round of tariffs Trump imposed on Chinese goods from his second term.
Trump on Oct. 29 predicted that he would reduce the 20% levy he placed on Chinese goods for the nation’s involvement in exporting fentanyl precursor chemicals, a move that would help make China even more competitive than other regional manufacturing rivals.
That tariff relief is in addition to the U.S. shelving a 100% duty Trump had threatened to implement on Nov. 1, extending a truce on similar high duties scheduled to expire later next month and pausing planned export controls on a broad swath of critical software and airplane parts. Trump’s administration is also expected to roll back levies and fees hitting Chinese ships, while the president said he’d probably abandon aprobeinto whether Beijing was abiding by a trade deal from his first term.
The Chinese are also likely topushfor Trump to scrap a rule that exposes subsidiaries that are at least 50%-owned by blacklisted firms to the same curbs as their sanctioned parent, a move that could affect thousands of companies. The regulations have also caused due diligence burdens for exporters.
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Trump added a new wrinkle to the talks on Oct. 29 when he suggested he’d be willing to discuss access to Nvidia Corp.’s flagship Blackwell AI processor. That would not only represent a major concession, and provoke national security hawks in Washington, but it would mark a shift from earlier this year, when Commerce Secretary Howard Lutnick said the administration would only allow China to buy the U.S.'s “fourth-best” chip.
The major Chinese concession is a promise to delay an expanded rare-earth licensing regime for at least a year, with a pledge to re-evaluate the program during that period. Beijing has used the restrictions as a cudgel in trade talks, threatening to limit access for U.S. and allied manufacturers to critical minerals vital to high-tech production.
China is alsoresumingsoybean purchases, with the country booking shipments for at least two cargoes of the American crop, its first known buy this season, according to people familiar with the matter. That provides a political victory for Trump, who has seen farmers in his political base suffer as they’re unable to offload an agricultural glut.
US officials are also hopeful Xi will approve the sale of the U.S. operations of ByteDance Ltd.’s TikTok social video app to a consortium put together by the Trump administration. Trump has credited TikTok with boosting his appeal with young voters and helping return him to the White House.
Seeking Stabilization
Despite the good vibes, any consensus may also prove as fleeting and fragile as past accords — particularly as both sides act as if they have the upper hand. While China has enraged Trump by retaliating and matching U.S. moves, Xi’s ability to withstand the president’s tariff barrage has helped bolster his standing at home and attract middle powers looking to diversify away from America.
“The U.S. and China are both seeking stabilization,” said Henrietta Levin, a senior fellow at the Center for Strategic and International Studies, a Washington-based think tank. “But stabilization on whose terms is really an open question. And Beijing feels very confident that they have the upper hand.”
Wu Xinbo, an adviser to the Chinese government, said Beijing is much better prepared for a trade war than during Trump’s first term. He called the rare-earth restrictions “very important leverage” and noted the resilience of exports, DeepSeek’s AI breakthrough and recent advances in chip production.
“All this combined has enhanced the confidence actually,” said Wu, director at Fudan University’s Center for American Studies in Shanghai. “This is not just a mood among the leaders. It’s a general mood prevalent among the public.”
Balancing Act
For Trump, the meeting is a political balancing act.China hawkswithin his party are watching closely what concessions he’s willing to make and whether he might barter away national security imperatives for a more ephemeral tariff agreement.
Trump signaled a determination ahead of the meeting to take the issue of Taiwan off the table, even after saying that for Xi, the self-governing island is the “apple of his eye.” China has sought an official declaration from the U.S. that it “opposes” Taiwanese independence, rather than simply saying American officials “do not support” such a move.
“There’s not that much to ask about Taiwan,” Trump told reporters Oct. 29.
Trump is also expected to pressure Xi to curtail support for Russia in its war in Ukraine, with U.S. officials describing plans to discuss a global peace accord. Washington may ask Beijing to curb the sale of so-called dual-use items with military applications. Trump has highlighted a drop in Chinese purchases of Russian oil that followed U.S. sanctions on Russian firms.
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But few expect serious intervention from the Chinese, who have sidled closer to Moscow since Vladimir Putin’s invasion of Ukraine. Bilateral trade rose to a record $245 billion in 2024, up 68% from 2021, according to Chinese customs data. In September, the two nations made progress on a massive pipeline deal that would give China stable supplies of gas and tie Moscow and Beijing together for decades.
All the moving pieces leave the scope of any deal — and the questions of what thorny questions are left for another time — somewhat unclear.
Still, Trump did little to temper expectations ahead of the meeting, saying during a meeting with South Korean President Lee Jae Myung the summit “obviously is very important to the world.”
“You’ll be watching very carefully,” Trump added.
