Trump, Xi Reach Trade Breakthrough During South Korea Summit/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ President Donald Trump announced tariff reductions on Chinese goods following a productive meeting with President Xi Jinping in South Korea. Both leaders signaled a willingness to cooperate on trade, rare earths, and technology. However, tensions persist as both nations continue to compete for global economic influence.
U.S.-China Trade Breakthrough Quick Looks
- Trump met with Xi Jinping in Busan, South Korea.
- U.S. tariffs on Chinese goods reduced from 57% to 47%.
- China agreed to export rare earth elements and buy U.S. soybeans.
- Trump hinted at a future visit to China in April.
- Nvidia may engage in chip trade talks with China.
- Both leaders emphasized the need for long-term cooperation.
- Market optimism increased following news of the meeting.
- Tensions still loom over AI, manufacturing, and Ukraine policy.
- Xi will stay in South Korea for APEC, while Trump returns to Washington.
Deep Look
Trump Cuts Tariffs on China After Xi Summit in South Korea
ABOARD AIR FORCE ONE — President Donald Trump announced a significant reduction in tariffs on Chinese imports after a high-stakes meeting with Chinese President Xi Jinping in South Korea. The move marks a shift in U.S. trade policy and signals a potential thaw in strained economic relations between the world’s two largest economies.
Speaking to reporters aboard Air Force One, Trump said the meeting was exceptionally productive. As a result, he decided to reduce tariffs on Chinese goods from 57% to 47%, including a cut in the tariff on chemicals linked to fentanyl production from 20% to 10%. The U.S. president described the meeting as a “12 out of 10,” underscoring his optimism about future engagement.
China responded by pledging to restart soybean imports from the U.S. and to relax export restrictions on rare earth elements—key resources in the production of high-tech equipment like electric vehicles, robotics, and defense systems.
Trump revealed plans to visit China in April, with Xi expected to travel to the U.S. afterward. He also mentioned that chipmaker Nvidia might soon begin discussions with Chinese officials regarding the export of advanced semiconductors.
A trade agreement between the two powers may be close, Trump suggested, though he stopped short of providing specific details. Xi, for his part, emphasized mutual cooperation in a statement circulated by Chinese state media. “Both sides should consider long-term benefits and avoid a cycle of retaliation,” he said.
Underlying Tensions Remain
Despite the upbeat tone, the U.S. and China remain locked in a fierce rivalry for technological, economic, and geopolitical influence. Issues such as artificial intelligence, semiconductor development, and international diplomacy—particularly surrounding Russia’s invasion of Ukraine—continue to pose friction points.
Trump’s aggressive tariff strategy since returning to office had escalated trade tensions. China retaliated with tighter controls on the export of rare earths, raising alarm across industries reliant on those materials. Yet Thursday’s summit illustrated a shared recognition of the dangers posed by continued conflict and the mutual desire to avoid triggering a global economic downturn.
At the start of their 100-minute meeting, Xi acknowledged the countries’ differences but emphasized their importance as global leaders. “We don’t always see eye to eye, and that’s normal,” he said through a translator. A slightly varied translation by China’s Xinhua News Agency framed the statement as an acceptance of inevitable disputes between major economies.
Progress in South Korea
The summit took place in Busan, a port city located near the venue for the Asia-Pacific Economic Cooperation (APEC) summit. The setting was modest—a military facility near Busan’s international airport—unlike the grandeur often associated with high-level diplomacy.
In the lead-up to the summit, U.S. officials hinted that Trump would not follow through on a threat to double tariffs on Chinese goods. China also signaled a willingness to compromise, showing openness to easing export restrictions and resuming agricultural imports.
Preliminary negotiations earlier in the week in Kuala Lumpur paved the way for the summit. Chinese trade chief Li Chenggang described the outcome as a “preliminary consensus,” a sentiment echoed by U.S. Treasury Secretary Scott Bessent, who noted the emergence of a successful framework.
Trump framed the meeting on his Truth Social account as the “G2”—a nod to the dominant economic positions of the U.S. and China.
Tariff Leverage and Economic Pressures
While Trump expressed confidence in reaching a deal, previous talks with China have often stumbled. Negotiations earlier this year in Geneva and London showed promise but ultimately faltered as both sides jockeyed for leverage.
Craig Singleton, director at the Foundation for Defense of Democracies, described the current development as typical. “It’s short-term stabilization marketed as strategic progress,” he said, pointing out the underlying strategic rivalry remains unresolved.
China’s influence lies in its dominance of rare earths, while Trump continues to use tariffs as his main negotiating tool. Earlier this year, Trump floated increasing tariffs to 145%, before scaling back due to market backlash. On October 10, he threatened a 100% import tax—one that is now adjusted to 47% with immediate effect.
Xi, meanwhile, has chosen to remain in South Korea for further meetings with APEC leaders, seeking to position China as a stable and cooperative global partner amid tensions surrounding U.S. trade policies.
Former diplomat Jay Truesdale, now CEO of TD International, suggested Xi is looking to gain favor with countries frustrated by U.S. protectionism. “He sees a chance to improve China’s multilateral relationships,” Truesdale said.
As leaders move forward from this pivotal moment, businesses, investors, and policymakers around the world will closely watch whether this detente marks the beginning of lasting cooperation or just another brief pause in a prolonged trade conflict.
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