A tactical pause in U.S.–China tensions
Donald Trump and Xi Jinping met on October 30, 2025, in Busan, South Korea for what both leaders described as a major turn in U.S.–China relations. The meeting concluded with a framework for a year-long truce in their trade war: the U.S. agreed to roll back certain threatened tariffs, while China pledged to resume large-scale U.S. soybean purchases and delay previously planned export controls on rare earths.
Despite the fanfare, analysts widely regard the outcome as a temporary cease-fire rather than a deep or durable settlement.
What each side gained (and avoided)
- On the U.S. side: Trump announced tariff levels on Chinese imports would drop from about 57 % to 47 % and suspended plans for further hikes, particularly relating to fentanyl-precursor tariffs.
- On the Chinese side: Beijing committed to buying 12 million metric tons of U.S. soybeans by January 2026 and at least 25 million tons annually for the next three years, easing pressure on U.S. farmers.
- Additionally, China agreed to delay rare-earth export curbs for at least a year and the U.S. paused expanding export‐control measures on some Chinese firms.
China’s longer game emerges
While the truce provides immediate relief, observers point out that China appears to be playing a longer strategic game:
- China’s leadership is using the pause to stabilise the bilateral environment, while preserving leverage—rare earths remain a potent tool in Beijing’s arsenal.
- China avoided conceding on the structural issues raised by the U.S., such as industrial over-capacity, state subsidies and global supply-chain dominance. Those topics were largely absent from the joint statement.
- By restoring the interplay of trade and diplomacy, China buys time to diversify its export markets and strengthen regional ties, reducing vulnerability to U.S. pressure.
Why the pause may not last
- The underlying causes of friction—technology race, security concerns, economic interdependence—remain unresolved.
- The framework is vague: both sides used broad terms and offered few mechanisms or enforcement provisions, meaning either party could pull back when convenient.
- Domestic pressures: Trump needs visible wins before his Asia tour concludes; China still faces export-slowdown and domestic economic headwinds.
- Contingent issues remain: Taiwan, South China Sea, North Korea, and supply-chain security were barely referenced but could spark the next confrontation.
What to watch next
- Implementation pace: Will China follow through on soybean purchases, and will the U.S. ease rare-earth and high-tech export constraints?
- Follow-up engagements: The announcement includes reciprocal leader visits in 2026; whether these deliver detail will matter.
- Market reaction: Share and commodity markets initially responded positively, but will momentum hold if the substance lags?
- Regional ripple-effects: How will U.S. allies—Japan, South Korea, Australia—respond to the U.S.–China détente and how will it affect Indo-Pacific security calculus?
The takeaway
This meeting between Trump and Xi delivered a breathing space, not a breakthrough. For now, both powers stepped back from escalation, but China appears to be emphasising endurance: playing a longer game while the U.S. secures immediate wins. The real test will be whether this respite becomes the foundation for deeper adjustment—or merely a pause before the next round of confrontation.
