Trump and Xi Hold Key Summit in South Korea Amid Intensifying Trade War

US President Donald Trump and Chinese President Xi Jinping met on Thursday in Busan, South Korea, for their first summit since 2019, in an attempt to ease tensions in the ongoing trade war between the two global powers. The meeting, held at Naraemaru inside an Air Force base, aimed to find common ground on issues like tariffs, rare earth exports, and fentanyl controls. Trump arrived from Gyeongju, where he attended the APEC meetings, while Xi began his three-day state visit to South Korea earlier in the day. “We’re going to have a very successful meeting,” Trump said before the talks, describing Xi as a “tough negotiator.” At the centre of the discussions was a possible agreement in which China would suspend new restrictions on rare earth exports for a year if the United States withdrew its plan to impose an additional 100% tariff on Chinese goods starting November 1.

Officials from both sides had reportedly reached a preliminary understanding over the weekend. However, major differences remain - China’s halt on US soybean imports has hit American farmers hard, while the US continues to press Beijing to curb the export of chemicals used to make fentanyl. Trump hinted that Washington could reduce fentanyl-related tariffs, currently at 20%, if China takes concrete steps against such exports. The trade war, which began with tit-for-tat tariffs, had seen duties soar to 145% on Chinese goods and 125% on American goods earlier this year before a brief truce reduced them. Currently, the US levies 50% on Chinese imports, while China maintains 10% on American goods.

While optimism remains low for a full resolution, any progress could ease market uncertainty. Security issues - including North Korea’s nuclear programme, China-Taiwan tensions, and disputes in the South China Sea - are also shaping the geopolitical backdrop. Trump downplayed the likelihood of Taiwan featuring in the talks, telling reporters, “I don’t know that we’ll even speak about Taiwan. He may want to ask about it, but Taiwan is Taiwan.”