skip to main content

What now for China-US trade tensions?

Donald Trump described his meeting with Xi Jinping as 'very successful'
Donald Trump described his meeting with Xi Jinping as 'very successful'

The most important meeting of US President Donald Trump's four-day Asia tour lasted just over an hour and a half, and ended with no formal press briefing and no formal deal signing - that's supposed to happen later. Details are in short supply.

But Mr Trump insisted that this meeting, on a scale of zero to ten, was a 12.

It appears that the beginnings of a US-China reset are now in view.

The most obvious sign of that happening was the meeting itself. Mr Trump greeted Chinese President Xi Jinping at a VIP meeting pavilion at Busan Airport for their first in person meeting since 2019.

Before the cameras, the two met for a handshake, with Mr Trump unable to resist the urge to say something.

"We're going to have a very successful meeting, I have no doubt. But he's a very tough negotiator. That's not good. We know each other well."

An American reporter asked if he planned to sign a trade deal today.

"Could be. I think we have a chance. We'll have a great understanding. We have a great relationship. We've always had a great relationship," Mr Trump said.

Donald Trump and Xi Jinping shake hands
US President Donald Trump said Chinese President Xi Jinping was a "tough negotiator"

Mr Xi, quite able to resist the urge to speak, withdrew his hand from Mr Trump's grasp when the backslapping from the US president became more pronounced, the photo opportunity at risk of descending into informality.

Inside the formal meeting room, Chinese formality came to the fore. There was a short greeting from Mr Trump.

"It's a great honor to be with a friend of mine, really, for a long time now. If you think about it, the very, very distinguished and respected president of China, and we will be having some discussions," he said.

"I think we've already agreed to a lot of things and we'll agree to some more right now. But Mr Xi is a great leader of a great country, and I think we're going to have a fantastic relationship for a long period of time. And it's an honor to have you with us."

Then a much longer statement from Mr Xi, using nautical themes to suggest the US-Chinese relationship was a great ship on a vast and unpredictable ocean, which could only be steered by the two leaders working together.

"Under our joint guidance, China-US relations have remained stable on the whole. Given our different national conditions, we do not always see eye to eye with each other, and it is normal for the two leading economies of the world to have frictions now and then," he said.

"And in the face of wind, waves and challenges, you and I at the helm of China-US relations should stay the right course and ensure the steady sailing forward of the giant ship of China-US relations."


Read more:
Trump cuts China tariffs after 'amazing' Xi meeting
What are the rare earths referenced in US, China deal?
Fentanyl, beans and Ukraine: What did Trump and Xi agree?


Mr Xi said the aims of the Chinese Communist Party were compatible with MAGA.

"I always believe that China's development goes hand in hand with your vision to make America great again. Our two countries are fully able to help each other succeed and prosper together," he said.

"Over the years, I have stated in public many times that China and the United States should be partners and friends. This is what history has taught us and what reality demands."

Partners and friends - a key phrase in China's public diplomacy with the US.

But the rest of the world, particularly those engaged in advanced manufacturing, have been looking with growing alarm at the deterioration of US-China relations over Mr Trump's tariffs and the combative response from Beijing.

The most significant was China's restrictions earlier this month on the export of rare earth metals, which is a critical bit of the industrial supply chain worldwide that China has come to dominate, mainly because its been prepared to tolerate the extreme pollution associated with the processing of rare earths into industrially useable products.

China supplies about 90% of the world's rare earth supplies, and controls key technologies used in their processing.

The restrictions, due to come into force on 8 November, were causing near panic in manufacturing industries in the US and Europe. In particular, producers of electric vehicles, aircraft engines, military radars and other defence equipment. Huge swaths of manufacturing were heading for severe supply chain problems.

At the weekend, US and Chinese negotiating teams signalled progress. But when the Trump-Xi meeting in Busan ended, the US President got straight aboard Air Force One and departed, as scheduled, for the US.

Once airborne, he briefed reporters on his understanding of what had happened, including an apparent one year parking of the rare earths restrictions by the Chinese. The arrangement is renewable annually, which implies a greater level of personal engagement by the two leaders in steering that great ship of US-China relations.

To begin, there was some classic Trump talking up of the meeting itself.

He said: "I thought it was an amazing meeting. He's a great leader, a great leader of a very powerful, very strong country, China. What can I say? It was an outstanding group of decisions, I think, that was made. A lot of decisions were made. There wasn't too much left out there."

And then, the news on rare earths.

"We have a deal. Now, every year, we'll renegotiate the deal. But I think the deal will go on for a long time, long beyond the year. But all of the rare earth has been settled, and that's for the world, worldwide," he said.

"I guess you could really say this was a worldwide situation, not just the US situation, and that the whole situation, that roadblock is gone now. There's no roadblock at all on rare earth that will hopefully disappear from our vocabulary for a little while."

US President Donald Trump, wearing a white shirt, red tie and dark suit, sits at a table with several other men, all wearing white shirts, dark suits and red or blue ties. There are white and blue flowers on the table. There are red and yellow Chinese flags, and blue, white and red US flags in the b
Mr Xi said China and the US are "fully able to help each other prosper together"

US farmers will be relived to know that China is relaxing its unannounced but very effective boycott of US grown soy beans. China is by far the biggest export for this very important cash rotation crop, which brought in $13 billion last year – but has seen zero dollars of sales this year.

With no storage available for this year's harvest, farmers need to start shifting the crop really soon, or face economic calamity.

"We're in agreement on so many elements - large amounts, tremendous amounts of the soy beans and other farm products are going to be purchased immediately, starting immediately," said Mr Trump.

"That was a very nice gesture."

During the zig-zag of tariff increases, cuts and increases that have played out since April, its been hard to keep up with what rate the Americans are taxing Chinese products at.

It seemed 37% was the settled rate, but then the president added a 20% 'Fentanyl Tariff' as a retaliatory measure. This is ostensibly aimed at pushing China to cut down on the supply of precursor chemicals used to make Fentanyl, the synthetic narcotic that is illegally imported from Mexico and which is associated with tens of thousands of drug deaths in the US each year.

The Chinese have in the past denied that they are the source of the precursor chemicals.

"On Fentanyl, we agreed that he was going to work very hard to stop the flow. It's a very complex subject because it's used for lots of different reasons, including anesthetics and things, but he's going to be able to see some real action taken," Mr Trump said.

"I've agreed, as you know, I put a 20% tariff on China because of the amount that is coming in, which is a big tariff. Based on his statements today, I reduced it by 10%, so it's 10% instead of 20% effective immediately."

Based on this, it appears that the new tariff on Chinese imports to the US is now 47%, down from a planned 57% - all due to the reduction in the Fentanyl tariff component.

Microchip exports - in effect only the very high end ones used in Artificial Intelligence computing, because China produces so much of its own microchip supply - was another topic widely anticipated.

Much speculation centre on whether Nvidia, which yesterday broke the five trillion dollar valuation barrier, would be allowed to export its latest high end Blackwell chip to China. It appears that particular chip was not discussed by the two leaders, but further talks between Nvidia and China will go ahead, with the US apparently acting as referee, stepping in to block any exports it doesn't like.

A head and shoulders image of US President Donald Trump wearing a white shirt, red tie and dark suit. He is looking ahead of the camera. There are two microphones in front of him. The background is white.
Mr Trump told reporters on Air Force One that Mr Xi was "a great leader"

Jensen Huang, NVidia's CEO, flew into Busan as Mr Trump was leaving. Aboard Air force One, the president told reporters: "We did discuss chips, and he's going to be... They're going to be talking to NVIDIA and others about taking chips. We make great chips, and NVIDIA is the leader. I'll be speaking to Jensen from NVIDIA."

A reporter asked: "Just to clarify, sir, that is the downgraded Blackwell chips? You would authorise those to be exported?"

"Not the Blackwell, we're not talking about the Blackwell," Mr Trump replied.

"That just came out yesterday. But a lot of chips, a lot of the chips. And that's good for us."

The two leaders also spoke about some foreign affairs issues, but not Taiwan, according to the President. Apparently China did not raise it and neither did he, but Ukraine was discussed.

"Yeah, it did come up. Ukraine came up very strongly. We talked about it for a long time, and we're both going to work together to see if we can get something done," he said.

"We agree that the two sides are, you know, locked in fighting, and sometimes you've got to let them fight, I guess. Crazy. But he's going to help us, and we're going to work together on Ukraine. There's not a lot more we can do.

"You know, he's been buying oil from Russia for a long time. It takes care of a big part of China. And, you know, I can say India has been very good on that front, but we didn't really discuss the oil. We discussed working together to see if we could get that war finished."

In August, Mr Xi hosted an event to mark the 80th anniversary of the end of WWII. China was one of the five victorious allies (the ones that have permanent seats veto powers in the UN security council). He was pictured with Vladimir Putin of Russia and Kim Jong-un of North Korea. But as a result of his meeting in South Korea, Mr Xi will get to host the US President, a demonstration to his people of China's power in international relations.

"So I think we agreed, I'll be going to China in April and he'll be coming here some time after that, whether it's in Florida, Palm Beach or Washington DC," said Mr Trump.

So the Busan meeting may be the beginning of a new, more intensive and more personality driven relationship between the US and China.

But if deals are going to be done on an annual basis, the rest of the world, particularly the industrial bit, will not be able to properly relax.