Trump and Xi Hold High-Stakes Summit in Busan to Ease Escalating US–China Trade Tensions

Seoul, Oct 2025 : US President Donald Trump and Chinese President Xi Jinping met on Thursday for a high-stakes summit in the South Korean port city of Busan, in a bid to de-escalate mounting trade tensions between the world’s two largest economies. The meeting, their first since 2019, is being closely watched for signs of a breakthrough in the prolonged US–China tariff war that has rattled global markets.

The two leaders met at Naraemaru, a reception hall located inside an Air Force base in Busan, shortly after Xi arrived in South Korea for a three-day state visit. President Trump reached the venue earlier in the day after departing from Gyeongju, the site of this year’s Asia-Pacific Economic Cooperation (APEC) meetings.

“We’re going to have a very successful meeting,” Trump told reporters as he posed for photographs alongside Xi before the talks began. Smiling, he added, “But he’s a very tough negotiator. That’s not good,” drawing light laughter from the press corps.

The Busan summit aims to lay the groundwork for a tentative trade agreement under which China would suspend its planned tightening of export controls on rare earth materials for one year. In return, the United States is expected to cancel a proposed 100 per cent tariff on Chinese goods that was due to take effect on November 1.

According to diplomatic sources, a framework agreement on the potential deal was reached between senior officials from both sides over the weekend, raising hopes of a temporary reprieve in the trade conflict.

Beyond rare earths, the two nations face a wide range of unresolved economic disputes. China halted its purchases of US soybeans earlier this year, dealing a severe blow to American farmers—a core political constituency for Trump ahead of next year’s elections. Washington has, meanwhile, used tariffs as leverage to pressure Beijing into curbing exports of precursor chemicals used to manufacture fentanyl, a synthetic opioid fueling a major drug crisis in the United States.

On Wednesday, Trump hinted that he was prepared to reduce the existing 20 per cent fentanyl-related tariffs, provided China committed to tightening its oversight of chemical exports.

The trade confrontation, which began with mutual accusations of unfair practices and intellectual property theft, has escalated sharply since early 2024. By April this year, tariffs on Chinese imports to the US had climbed to 145 per cent, while Beijing retaliated with duties of up to 125 per cent on American goods. Following a temporary truce reached in May, those rates have been reduced to about 50 per cent on Chinese goods and 10 per cent on US exports, but tensions remain high.

Despite the uncertainty, Trump has struck an optimistic tone in recent days. “Very much looking forward to my meeting with President Xi of China,” he wrote on Truth Social hours before the summit. “It will take place in a few hours!”

While few analysts expect the meeting to produce a comprehensive resolution to the trade war, even a limited agreement to pause or roll back punitive measures could signal a modest thaw and restore a measure of stability to global supply chains.

Beyond trade, security and geopolitical concerns also loom large in the US–China rivalry. The two leaders are expected to discuss North Korea’s nuclear program, China’s territorial claims in the South China Sea, and the increasingly fraught China–Taiwan relationship, according to reports from Yonhap News Agency.

However, Trump downplayed expectations of any in-depth discussion on Taiwan. “I don’t know that we’ll even speak about Taiwan,” he told reporters aboard Air Force One on Wednesday. “I’m not sure. He may want to ask about it. There’s not that much to ask about. Taiwan is Taiwan.”

As the Busan talks continue, diplomats and global markets are watching closely to see whether this long-awaited Trump–Xi summit can halt the cycle of escalating tariffs and restore a measure of predictability to the world’s most consequential bilateral relationship.