Quick take | Xi and Trump step back from the edge

China and the US have averted a trade catastrophe.

• For now.

After weeks of nervous anticipation, Xi Jinping met with US President Donald Trump in Busan, South Korea, on October 30.

Some context: This is the first time the two leaders have met face-to-face since 2019 during Trump’s first term.

• The meeting comes after months of dramatic ups and downs in China-US relations, including a major retaliatory cycle in recent weeks.

At the time of writing, details are still emerging, but the meeting appears to have set the stage for a significant de-escalation of US-China trade tensions.

So far, the most concrete source of information comes from a Ministry of Commerce (MofCom) spokesperson, who listed the following outcomes:

• The US agreed to remove 10% tariffs on Chinese goods originally imposed due to China’s alleged failure to stop fentanyl precursor chemicals from entering the United States.
• The US would continue to suspend “Liberation Day” tariffs of 24% for another year while China would also suspend 24% retaliatory tariffs on US goods for the same period.
• The US Commerce Department’s Bureau of Industry and Security (BIS) will delay the implementation its 50% subsidiary rule for Entity List and Military End-User List entrants for one year in return for China delaying its new export controls on rare earths and battery tech for the same period.
• The two sides agreed to postpone countervailing measures on each other’s maritime, logistics, and shipbuilding industries for one year.

MofCom also said the two sides would expand cooperation on fentanyl control, agricultural trade, and “individual cases involving certain companies” – likely referring to ongoing wrangling over TikTok’s US operations.

If MofCom’s recount is accurate, Xi and Trump effectively agreed to a one-year trade ceasefire, a rollback of the major escalatory measures of the past month, and a commitment to further cooperation on hot-button issues.

• Not bad for day’s work.

Trump also hinted at some additional agreements beyond what was listed in the MofCom readout, while speaking to journalists aboard Air Force One:

• He indicated that China had pledged to purchase a “tremendous” amount of soybeans, as well as other US agricultural products. Speaking on Fox Business, Treasury Secretary Scott Bessent later said China has agreed to buy 12 million metric tons of US soybeans this year, and will purchase a minimum 25 million metric tons annually for the next three years (Bloomberg). If realized, that would bring Chinese imports of US soybeans back to average levels seen over the past few years.
• Trump also said that China would engage in talks with chipmaker Nvidia while the US would only act as a “referee,” suggesting at least the possibility of loosened tech export controls.
• At the same presser, US Trade Representative Jamieson Greer said that China had agreed to “keep [rare earths] flowing,” a likely reference to a continued Chinese commitment to licensing rare earths to US buyers in line with previous understandings.

While the talks were wide-ranging, some topics were notably absent:

• TikTok does not appear to have been specifically discussed.
• Trump also told reporters that Taiwan didn’t come up in conversation.

Finally, Trump said that he planned to travel to China in April and that Xi may travel to the US sometime later.

• Assuming the US and China can keep the good vibes rolling until then, a Trump visit to Beijing would create a major opportunity to build upon existing understandings.

Taking stock: We expect more details to emerge in the coming days, but any way you slice it, the Xi-Trump meeting achieved (at least in principle) a major de-escalation in bilateral trade tensions, averting a huge US tariff hike and a similarly drastic Chinese response.

• The year-long duration of the truce should also provide some much-needed stability for global business.
• It also proves that it is possible for the US and China to find their way back to the negotiating table in a moment of crisis and that there’s still a preference for negotiated settlements over all-out decoupling.
• Indeed, in the official Chinese readout, Xi opined that “dialogue is better than confrontation” and that the two countries should “avoid falling into a vicious cycle of mutual retaliation.”

What happens next: Now that the two big kahunas have agreed to reduce hostilities, working-level officials need to hammer out the details.

• This will be a long and uneven process, especially given the breadth and depth of the disagreements – and misunderstandings – in the Sino-American trade relationship.
• A major test of the strength of today’s agreement will be if it can survive the next inevitable flare up in bilateral tensions.

The bigger picture: Despite today’s backslapping and gladhanding, China’s long-term approach to the US has not changed one iota.

• Beijing still views Washington as an unreliable partner and will double down on achieving tech self-sufficiency, reducing vulnerability to US pressure, and making itself indispensable to global supply chains.
• Moreover, the Busan meeting vindicated China’s strategy of proportional retaliation against US provocation and effective use of rare earths as leverage.

The bottom line: US-China trade tensions may have been dialed back, but that dial still goes all the way up to eleven.  

• We’ll be watching for any signs that today’s agreement is either holding fast or breaking down.