30/10/25

US and China agree one-year trade truce after Donald Trump-Xi Jinping talks

Leaders agree to postpone export restrictions on rare earths and semiconductors after South Korea summit

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This article is republished from The Financial Times

US President Donald Trump says Chinese President Xi Jinping is a "very tough negotiator" as the two meet for talks in South Korea on trade.

Donald Trump and Xi Jinping have agreed to postpone export controls on rare earths and chips as part of a broad one-year trade deal reached by the US and Chinese leaders at a summit in South Korea.

The US and China said they also reached agreements on American tariffs related to fentanyl and tit-for-tat levies on each other’s shipping industries, as both leaders sought to ease tensions in their first meeting in six years.

“It was an amazing meeting,” the US president told reporters aboard Air Force One as he flew back to Washington on Thursday. “On a scale of 0–10, with 10 being the best, the meeting was a 12.”

Trump said they had agreed on an “outstanding group of decisions” and that the US and China would sign a trade deal “pretty soon.”

“We have not too many stumbling blocks,” Trump said.

“Every year, we will review the deal, but I think the deal will go . . . long beyond a year.” A trade truce had been set to expire next month, threatening the reinstatement of tariffs of more than 100 per cent.

Trump said the two sides had settled the dispute over rare earths, minerals critical to global manufacturers. China dominates the supply chain for rare earths and imposed sweeping export controls earlier this month that sparked a dramatic escalation in tensions.

Trump said he had agreed to cut the fentanyl-related tariff on China from 20 to 10 per cent because Xi had pledged “to work very hard” to stem exports of the chemical ingredients for the opioid.

“I think you will see some real action taken,” he said.

The reduced fentanyl tariff brings average levies on imports from China to 45 per cent.

Trump said the leaders had also discussed semiconductors, and that Nvidia would talk to China about exporting chips, but he said the discussions did not cover the most advanced microelectronics.

The president said he would visit China in April and that Xi would make a reciprocal visit to the US.

After the summit, China’s commerce ministry confirmed that Beijing had agreed to suspend the implementation of the rare earths export controls and that the US would suspend the extension of its technology-related export controls to subsidiaries of Chinese companies announced late last month, also for one year.

The commerce ministry said the US had also agreed to suspend recently imposed port fees on China’s maritime, logistics and shipbuilding industries for one year, after which Beijing would suspend its countermeasures targeting US-linked ships.

“In addition, both sides reached consensus on issues such as co-operation in fentanyl control, expanding agricultural trade, and handling individual cases involving relevant companies,” it said.

It added that China agreed “to work with the US to properly resolve issues related to TikTok.”

Trump had previously said that China had agreed to allow US control of the Chinese-owned video app in the US.

Han Shen Lin, China country director for US consultancy The Asia Group, said the cut to fentanyl-related tariffs showed Beijing’s efforts to curb exports of precursors of the drug were “finally being acknowledged” by Washington.

The move would set expectations for another 10 per cent tariff cut at the next Trump-Xi meeting, he said.

Chinese state media did not cite Xi as confirming the deals.

But the Communist party mouthpiece People’s Daily quoted Xi as saying: “Both teams should refine and finalise the follow-up work as soon as possible, uphold and implement the consensus, and deliver tangible results.”

Trump said the leaders did not discuss Taiwan.

Some experts had expressed concern that the US president might make concessions on Taiwan — over which China claims sovereignty — to facilitate a deal.

“Taiwan never came up. It was not discussed,” Trump said.

Posting on Truth Social from Air Force One, Trump said the US was working with China to secure a “very large scale transaction” involving oil and gas from Alaska, without providing more details.

The talks in South Korea’s southern port city of Busan lasted roughly 90 minutes.

Both leaders were in South Korea to attend a gathering of the Asia-Pacific Economic Cooperation forum in the nearby city of Gyeongju.

In opening remarks to the summit, Trump hailed Xi as a “great leader of a great country,” adding that the two would “have a fantastic relationship for a long period of time.”

Xi said it was natural that the US and China would “not always see eye to eye” and it was “normal for the two leading economies of the world to have frictions now and then.”

Dennis Wilder, a former head of China analysis at the CIA, said the “tactical agreements” set the stage for US Treasury secretary Scott Bessent and his Chinese counterpart He Lifeng to convert the trade framework into a comprehensive deal that could be sealed when Trump visited China, if not before.

He added both sides could reimpose punitive measures if little concrete progress was made.

But other China experts said Beijing had gained the upper hand in the negotiations.

“Xi stared down Trump and Trump blinked,” said Scott Kennedy, a China expert at CSIS, a think tank. “Xi has mastered managing Trump. Meeting US threats with larger threats . . . has gotten Washington to back down.”

US stock futures and most equity markets in Asia were steady or slightly down on Thursday following the meeting.