US and China Edge Toward Trade Agreement Amid Rising Tensions
With hopes of an agreement between the two biggest economies in the world, Washington’s top trade envoy said in Kuala Lumpur on Sunday that the second day of trade discussions between the US and China was setting the stage for a “productive meeting” between President Donald Trump and President Xi Jinping. US Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent engaged in discussions with Chinese Vice Premier He Lifeng during the Association of Southeast Asian Nations meeting. This marks the fifth round of in-person talks since May, as both parties aim to reduce tensions in the ongoing trade war. “I think that we’re getting to a spot where the leaders will have a very productive meeting,” Greer said as he stepped away from the talks to meet Trump. China’s top trade negotiator, Li Chenggang, is also participating in the talks. When we inquired whether rare earths were part of the discussions that began on Saturday, Greer responded that a wide array of topics were covered, including the extension of the truce on trade measures.
Both sides are seeking to prevent an escalation of their trade war following US President Donald Trump’s threat of new 100% tariffs on Chinese goods and additional trade restrictions set to begin on November 1. This move comes in response to China’s significantly increased export controls on rare earth magnets and minerals. Trump arrived in the Malaysian capital on Sunday morning for the summit, marking his first stop in a five-day Asia tour that is anticipated to culminate in a face-to-face meeting with Xi in South Korea. A favorable result from the Kuala Lumpur discussions would eliminate obstacles for the crucial meeting scheduled for Oct 30. While the White House has officially announced the highly anticipated Trump-Xi talks, Beijing has yet to confirm that the two leaders will meet. Trump’s discussions with Xi encompass Chinese acquisitions of US soybeans, apprehensions regarding Taiwan, which is governed democratically but regarded by Beijing as its own, and the situation surrounding the imprisoned Hong Kong media.
Trump stated that he would seek China’s assistance in Washington’s interactions with Russia, as Moscow’s conflict in Ukraine nears its fourth year. US Secretary of State Marco Rubio stated on Sunday that the US will not abandon Taiwan in exchange for trade advantages with China. Tensions between the world’s two largest economies escalated in recent weeks as a fragile trade truce—established following their initial round of trade discussions in Geneva in May and prolonged in August—proved insufficient to avert further sanctions, export restrictions, and threats of intensified retaliatory actions from both sides. The most recent discussions are expected to focus on China’s increased regulation of rare earths exports, which has led to a worldwide shortage. The Trump administration is reportedly contemplating a ban on “critical software” exports to China, encompassing a range of products from laptops to jet engines, as stated in a report.
A day prior to the commencement of the talks, the US initiated a new tariff investigation regarding China’s “apparent failure” to adhere to the “Phase One” trade deal established in 2020. The new investigation into unfair trade practices strengthens Trump’s arsenal in the ongoing conflict with China. Any agreement from Sunday’s talks is likely to be fragile as the world’s most important trade relationship, worth $660 billion a year, hangs in the balance.
