US, China seal deal on rare earths; Trump says Xi meeting was a 12 on scale of 1 to 10
Sign up now: Get insights on Asia's fast-moving developments
- Trump and Xi meet in Busan to ease trade war tensions, potentially lowering trade barriers imposed this year.
- Key concessions discussed include China curbing fentanyl production, resuming US soya bean purchases, and sale of a TikTok stake.
- A US-China trade thaw could disadvantage South-east Asia’s exports to the US due to tariff competition.
AI generated
AUSTIN/BUSAN/SINGAPORE - US President Donald Trump said his meeting on Oct 30 with his Chinese counterpart Xi Jinping was “amazing” and that both sides had reached a trade deal on rare earths, soya beans and tariffs on chemicals for the drug fentanyl.
He said tariffs on China will be cut to 47 per cent from 57 per cent.
In comments after their widely anticipated meeting
Effective immediately, the US will reduce fentanyl tariffs to 10 per cent from 20 per cent, while China will restart soya bean purchases immediately, too.
Mr Trump told reporters aboard Air Force One that all the rare earths issues have been settled, with no more roadblocks. He said it is a one-year agreement that will be extended.
“All of the rare earth has been settled,” Mr Trump said, according to Reuters. “And that’s for the world, worldwide, you could say this was a worldwide situation, not just a US situation.
“There is no roadblock at all on rare earth. That will hopefully disappear from our vocabulary for a little while.”
China dominates Recent restrictions add tariffs of 100 per cent
According to Bloomberg, Mr Trump said he discussed sales of Nvidia chips to China with Mr Xi and that it was up to Beijing to continue conversations with the company about access to the world’s largest semiconductor market.
But discussions in Busan did not focus on sales to China of Nvidia’s latest Blackwell accelerators, Mr Trump told reporters. “We’re not talking about the Blackwell,” he said.
More details of what was agreed in Busan are due to be released, following the meeting that lasted one hour and 40 minutes. China has not yet officially commented on the outcomes.
Earlier, both men were all smiles in front of the cameras before the talks got under way.
“It’s a pleasure to see you again,” Mr Xi said as he shook Mr Trump’s hand in front of the media. “Good to see you again,” Mr Trump replied.
The first meeting of the two leaders since Mr Trump’s return to the White House is an attempt to calm the waters in the middle of a trade war between the two biggest economies in the world.
The hope is that the talks may result in a lowering of the high trade barriers they have imposed on each other in 2025.
“We’re going to have a very successful meeting, I have no doubt,” Mr Trump said. “But he’s a very tough negotiator and that’s not good,” he added as he patted Mr Xi on the back. “We know each other well.”
A statement from the Chinese Ministry of Foreign Affairs said Mr Xi had told Mr Trump that it was important that the relationship stayed on course.
“You and I are at the helm of China-US relations,” Mr Xi said. “In the face of winds, waves and challenges, we should stay the right course, navigate through the complex landscape, and ensure the steady sailing forward of the giant ship of China-US relations.”
“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 friction now and then,” he added.
The high-stakes encounter has special significance for South-east Asia. Lower tariffs on Chinese goods would leave the region’s exporters competing with the world’s largest manufacturer for the American market.
The meeting was the last stop on Mr Trump’s five-day trip to Asia that also took him to Malaysia and Japan.
Originally scheduled to last about two hours, the closed-door meeting took place about 80km from Gyeongju, where 21 leaders from Asia-Pacific Economic Cooperation (Apec) grouping are gathered to make a case for free trade at their summit.
Given the deal-making US President’s penchant for the dramatic, there was some expectation that the talks would last longer.
And, sure enough, Mr Trump managed to grab eyeballs with another social media post just an hour before the delegations met.
He announced that he would direct the Pentagon to begin testing nuclear weapons “on an equal basis” with Russia and China.
No other details were revealed but it was a reversal of decades of moratorium on testing. The last nuclear weapon test in the US was held in 1992.
Mr Han Lin, China managing director for The Asia Group, a Washington, DC strategic advisory group, called it typical of Mr Trump – bold and disruptive.
“He’s forcing the room to focus on US leverage amid the smiles! If it lands a trade win, it’s genius; if it poisons the well, I guess we’re in for frostier summits ahead. Quite an opening!” Mr Han said.
The deal on rare earths, fentanyl and soya beans will dial back the tensions for now, with expectations of more concrete achievements to come from Mr Trump’s planned visit to China early in 2026.
Mr Trump said Mr Xi would take concrete steps to reduce the flow of precursor chemicals used to create fentanyl.
“I believe he’s going to work very hard to stop the death that’s coming in,” Bloomberg quoted him as saying.
The synthetic drug fentanyl
The concessions would be popular with Mr Trump’s key political constituencies and further his Republican Party’s prospects in 2026’s midterm congressional elections. The US stock market has been climbing on the hopes of a trade framework coming out of the meeting.
One of the more contentious issues on the table is China’s reported keenness that the US cut back its support for Taiwan,
The fears are not unfounded, with Mr Trump downgrading diplomatic engagements with Taiwan during his second term, and blocking the sale of a major arms package to it.
Taiwan never came up in the two leaders’ discussions, Mr Trump said.
The US President has said he does not believe China would invade Taiwan during his presidency, creating uncertainty over his commitment to bolstering the island’s defences.
For the region, the US-China thaw could bring mixed blessings.
Lower tariffs on goods from China could pit it as a rival in South-east Asia’s own trade with the US, even the reduction to 47 per cent from 57 per cent.
Against this, exports to the US from South-east Asian nations face tariffs of about 19 per cent. Goods from Singapore, as a result of a 2003 free trade pact with the US, face a lower tariff of 10 per cent.
Observers are watching to see if a thaw results in both the US and China stopping pressure on the region to pick sides.
Mr Gregory Poling, who directs the Southeast Asia Programme at the Centre for Strategic and International Studies, said that aspect is unlikely to change, no matter the outcome of the Trump-Xi summit.
“Most countries will try and keep up engagement with both while looking to Europe, the Gulf and elsewhere for long-term diversification,” he said. “Both Beijing and Washington are now dangerous.”
The total goods trade between the US and China was an estimated US$582 billion (S$754.5 billion) in 2024. This included goods worth US$439 billion imported from China and goods exported to China valued at US$143 billion.
Ahead of the Trump-Xi summit at Gimhae airport in Busan, a small group of protesters who had hung American flags on their vehicles and were shouting anti-Chinese slogans through loudspeakers were quickly quelled by the police. Three people were detained for causing disturbance.
Local media also reported that there was a group from the Chinese community who were present to welcome Mr Xi’s arrival, while a separate group of conservatives were there to send off Mr Trump.
In South Korea, the right-leaning conservatives are traditionally pro-American and supportive of the two countries’ alliance.
On Oct 29, both anti-Trump and anti-China rallies took place at separate locations in Gyeongju, where the annual Apec summit is being held.
In the US, wariness has only grown over the decade about China’s bulging manufacturing muscle and the threat it poses to American supremacy.
But the bipartisan consensus over viewing China as a somewhat unscrupulous competitor has shown the first signs of fraying.
A new poll by the Chicago Council on Global Affairs has shown that Republicans and Democrats have opposing views on China.
It says that Republicans favour decoupling from China, and want containment over cooperation. By contrast, Democrats don’t see China as a top threat, oppose decoupling, and favour cooperation over containment, “especially on issues of common concern like arms control and climate change”.
Older polls, such as the one by Pew Research Centre in 2024, have shown that eight in 10 Americans have an unfavourable view of China.
Such sentiments leave open the question of how durable a US-China trade truce can be.
