Trump, China's Xi are meeting in South Korea to try to roll back months of trade tensions

Busan(South Korea) | President Donald Trump met face-to-face with Chinese leader Xi Jinping on Thursday, a chance for the leaders of the world's two largest economies to stabilise relations after months of turmoil over trade issues.

Trump's aggressive use of tariffs since returning to the White House for a second term combined with China's retaliatory limits on exports of rare earth elements have given the meeting newfound urgency. There is a mutual recognition that neither side wants to risk blowing up the world economy in ways that could jeopardize their own country's fortunes.

“We're going to have a very successful meeting, I have no doubt,” Trump said as they shook hands. The US president added Xi is a “very tough negotiator.” Trump said they “could” possibly sign a deal coming out of the meeting but they have a “great understanding” of each other.

When the two were seated, Xi read prepared remarks that stressed a willingness to work together despite differences.

“Given our different national conditions, we do not always see eye to eye with each other,” he said through a translator. “It is normal for the two leading economies of the world to have frictions now and then.” There was a slight difference in translation as China's Xinhua News Agency reported Xi as telling Trump that having some differences is inevitable.

Finding ways to reduce tensions

In the days leading up to the meeting, US officials have signalled that Trump does not intend to make good on a recent threat to impose an additional 100 per cent import tax on Chinese goods — and China has shown signs it is willing to relax its export controls on rare earths and also buy soybeans from America.

The meeting began at 11:13 am (10 p.m. ET) in Busan, South Korea, a port city about 76 kilometres south from Gyeongju, the main venue for the Asia-Pacific Economic Cooperation summit. Trump's helicopter landed at 10:17 am local time, with an Air China plane rolling on the tarmac about 10 minutes later.

The meeting lasted a little over 100 minutes, with the two leaders emerging out the front door and talking briefly. They shook hands and Trump appeared to say something into Xi's ear, just before the Chinese leader entered his own limousine. Trump was shortly back aboard Air Force One to return to the US Officials from both countries met earlier this week in Kuala Lumpur to lay the groundwork for their leaders. Afterward, China's top trade negotiator Li Chenggang said they had reached a “preliminary consensus,” a statement affirmed by US Treasury Secretary Scott Bessent who said there was “ a very successful framework." Trump told reporters while flying to South Korea aboard Air Force One that he may reduce tariffs that he placed on China earlier this year related to its role in making fentanyl.

“I expect to be lowering that because I believe that they're going to help us with the fentanyl situation,” Trump said, later adding, “The relationship with China is very good.” Shortly before the meeting on Thursday, Trump posted on Truth Social that the meeting would be the “G2,” a recognition of America and China's status as the world's biggest economies. The Group of Seven and Group of 20 are other forums of industrialized nations.

But while those summits often happen at luxury spaces, this meeting is taking place in humbler settings. Trump and Xi will be talking in a small gray building with a blue roof on a military base adjacent to Busan's international airport.

The anticipated detente has given investors and businesses caught between the two nations a sense of relief. The US stock market has climbed on the hopes of a trade framework coming out of the meeting.

Pressure points remain for both US and China

However cordial the rhetoric, Trump and Xi remain on a potential collision course as their countries vie to dominate manufacturing, develop emerging technologies such as artificial intelligence and shape world affairs such as the status of Russia's war in Ukraine. Trump indicated that he did not plan to bring up issues such as the security of Taiwan with Xi.

“The proposed deal on the table fits the pattern we've seen all year: short-term stabilization dressed up as strategic progress," said Craig Singleton, senior director of the China program at the Foundation for Defense of Democracies. “Both sides are managing volatility, calibrating just enough cooperation to avert crisis while the deeper rivalry endures.” The US and China have each shown they believe they have levers to pressure the other, and the past year has demonstrated that tentative steps forward can be short-lived.

For Trump, that pressure comes from tariffs.

Right now, China had faced new tariffs this year totaling 30 per cent, of which 20 per cent has been tied to its role in fentanyl production. But the tariff rates have been volatile. In April, he announced plans to jack the rate on Chinese goods to 145 per cent, only to abandon those plans as markets recoiled.

Then, on October 10, Trump threatened a 100 per cent import tax because of China's rare earth restrictions.

Xi has his own chokehold on the world economy because China is the top producer and processor of the rare earth minerals needed to make fighter jets, robots, electric vehicles and other high-tech products.

China had tightened export restrictions on October 9, repeating a cycle in which each nation jockeys for an edge only to back down after more trade talks.

What might also matter is what happens directly after their talks. Trump plans to return to Washington, while Xi plans to stay on in South Korea to meet with regional leaders during the Asia-Pacific Economic Cooperation summit, which officially begins on Friday.

“Xi sees an opportunity to position China as a reliable partner and bolster bilateral and multilateral relations with countries frustrated by the US administration's tariff policy,” said Jay Truesdale, a former State Department official who is CEO of TD International, a risk and intelligence advisory firm.