Trump-Xi talks could end months of global economic chaos Donald Trump

Ahead of Thursday’s long-awaited first meeting between Donald Trump and Xi Jinping since the US president returned to office, officials on both sides were outlining what a trade deal between Washington and Beijing might look like, an agreement that could put an end to months of global economic chaos caused by the US-China trade war.

The two leaders have not met in person since 2019. Since then, the war in Ukraine and growing concerns in Washington over China’s technological advances, as well as long-standing issues around unbalanced trade relations between the United States and China, have strained ties between the two superpowers.

Thursday’s meeting, on the sidelines of the Asia-Pacific Economic Cooperation Summit in Seoul, is an opportunity to reset relations.

On Wednesday, Trump struck an optimistic tone when he spoke to reporters aboard Air Force One, saying: “I think we’re going to have a great meeting with Chinese President Xi, and a lot of problems will be resolved.”

The US President also indicated that the sensitive issue of Taiwan may not be discussed. Trump said: “I don’t know if we’re even going to talk about Taiwan. I’m not sure. He might want to ask about it. There’s not much to ask about. Taiwan is Taiwan.”

Beijing claims Taiwan as a province of China, and is running a multi-faceted campaign to pressure its government to accept what it calls “reunification.” Government officials on Wednesday reiterated their warnings that they would “never” rule out using military force to annex Taiwan if necessary. A series of state media editorials this week outlined its plans for Chinese rule in Taiwan.

The United States is Taiwan’s most important supporter in resisting Beijing’s threats, but Trump’s inconsistent stance on this support has prompted other members of his administration to offer assurances that the United States will not abandon it.

Rare earth elements will be high on the agenda of the Xi-Trump meeting. China’s control over supplies of critical minerals — which are vital to American industries from automobile manufacturing to military equipment — has been a powerful bargaining chip for Beijing.

China controls about 70% of the world’s rare earth mining and more than 90% of its processing capacity. This month, Beijing increased its restrictions on the export of rare earths and related technologies, citing national security concerns. Analysts noted that this came shortly after the United States expanded restrictions on the export of advanced semiconductor technology to China.

In initial talks held in Kuala Lumpur over the weekend, Beijing appeared to agree to postpone new export controls for a year, likely in exchange for Washington freezing new chip export controls.

Such a barter agreement would be a win for both the Chinese and American economies — although hawks in Washington would complain that easing chip export controls, aimed at isolating China from advanced artificial intelligence research, could harm U.S. security in the long term.

However, Trump appears to be hedging his bets on rare earths, as the past few months have exposed the US’s dependence on China for these vital commodities.

On Tuesday, Trump and new Japanese Prime Minister Sanae Takaishi signed an agreement to secure the mining and processing of rare earths and other minerals. The White House said the two countries will consider mutually complementary arrangements for storing important minerals statement.

Japan is one of the only major economies that has actively worked to reduce its dependence on China for rare earth elements, a model that many in the United States want to follow. In 2010, a clash between Chinese and Japanese boats in the East China Sea led to fears that China would block the export of rare earths to Japan, sending its industry, especially the automobile industry, into panic. In the years that followed, Japan reduced its dependence on rare earths from China from 90% to 60%.

China is also seeking to reduce its dependence on the United States. China on Tuesday signed an update to its free trade agreement with the ASEAN bloc of Southeast Asian nations, which together are China’s largest trading partner. Bilateral trade between China and ASEAN totaled $771 billion (£580 billion) last year, compared to $659 billion (£496 billion) in trade between the US and China.

Hanging over the talks is the risk of a global trade war, which in April saw tariff levels threatened or imposed by both sides. These levels have reached the level of a trade embargo between the two largest economies in the world. In recent weeks, Trump has threatened to impose 100% tariffs on Chinese goods, starting in November, in response to restrictions on rare earth elements. But it now appears that these definitions will be avoided.

This still leaves a question about what will happen to the high tariffs that Beijing and Washington imposed on each other at the start of the trade war, which have now stalled until the November 10 deadline for reaching a deal.

As of September 25, China’s average tariff on U.S. exports was 32.6%, while the average U.S. tariff on Chinese exports was 57.6%. according to Peterson Institute for International Economics. In April, tariffs on both sides exceeded 130%.

“Both leaders see themselves and their countries as being in a very strong position,” said Bonnie Glaser, executive director of the Indo-Pacific program at the US-based German Marshall Fund. “They both want to avoid a return to the very high tariffs they threatened each other with earlier this year,” she added.

On Monday, Chinese Foreign Minister Wang Yi spoke with US Secretary of State Marco Rubio by phone. Wang acknowledged “setbacks” in US-China trade relations and called on both sides to uphold the “spirit of equality, respect and mutual benefit” in this week’s talks.

Trump and Xi are also likely to discuss controlling fentanyl and finalizing the TikTok deal agreed to in Madrid.

But regardless of the details of any agreements, the biggest breakthrough at this week’s summit will be confirmation that constructive talks between the two most powerful men in the world are possible. Trump challenged hawks in Washington, using a relatively conciliatory tone with Xi. Glasser said Xi is “confident in his ability to manage Trump at this particular juncture.”

Both sides have an interest in calming the trade war. “There is a growing finding in the United States that coexistence may be beneficial,” said Feng Chuqing, a partner at Hutong Research, an independent consulting firm based in Beijing and Shanghai. [that] I feel that the American model towards China is gradually changing.