At summit, US and China declare ceasefire in trade war
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Ann Scott Tyson Staff writer
| Beijing
Xi Jinping struck a confident tone as he and U.S. President Donald Trump hammered out an apparent truce in their six-month trade war on Thursday 鈥� in which the Chinese leader has matched Mr. Trump blow for blow.
They instructed their teams to finalize 鈥渟oon鈥� a deal aimed at stabilizing commerce and halting a dangerous escalation of the trade conflict that has threatened to roil the world鈥檚 two biggest economies.
鈥淭he two sides... must not fall into a vicious cycle of mutual retaliation,鈥� Mr. Xi told Mr. Trump, according to a summary of his remarks provided by China鈥檚 Foreign Ministry.
Why We Wrote This
Beijing and Washington have been locked in a costly trade war for six months. In South Korea on Thursday, Donald Trump and Xi Jinping called a truce and pledged to work more closely together in the future.
Beijing offered few details following the two-hour meeting in Busan, South Korea, the first face-to-face talks between the two leaders since 2019.
But Mr. Trump told reporters aboard Air Force One afterward that both sides gave ground in key areas. Beijing agreed to suspend restrictions on its global exports of rare earths, of which 90% are processed in China, he said. These are critical minerals used for everything from jet engines to electric vehicles.
Mr. Trump said he agreed to halve 鈥渋mmediately鈥� the United States鈥� 20% fentanyl-related tariff on Chinese exports after Mr. Xi pledged to crack down 鈥渧ery hard鈥� on illicit exports to the U.S. of fentanyl precursors.
Later Thursday in Washington, Treasury Secretary Scott Bessent said the two sides could sign a trade agreement as early as next week. He said China agreed to buy 25 million metric tons of American soybeans annually as part of the deal.
The tariff cut still leaves Washington with a roughly 45% average tariff rate on imports from China, compared with China鈥檚 32% tariff on imports from the U.S. The tariffs have led American imports from China to plunge from $42 billion in January to $19 billion in June, before rebounding slightly to $26 billion in July, according to a Cathay Bank report.
Yet China鈥檚 economy has weathered the U.S. pressure, Mr. Xi told Mr. Trump, noting that gross domestic product in his country grown by a robust 5.2%, while its overall trade in goods increased by 4% during the first three quarters of this year.
Xi displays confidence
鈥淲e have the confidence and capability to navigate all kinds of risks,鈥� Mr. Xi said. The latest trade instability has given both sides some 鈥渋nsights,鈥� he said, possibly hinting that Washington had underestimated China鈥檚 resilience when it launched the trade war in April.
Though China is broadly more reliant on the U.S. market for exports, Beijing has skillfully leveraged its strengths in key trade sectors, halting imports of American soybeans, for example, and wielding supply-chain dominance over goods such as rare earth magnets.
China鈥檚 sweeping move this month to tighten its grip on the rare earth industry with a global licensing requirement showcased Beijing鈥檚 chokehold. 鈥淭hat really felt like Xi was shifting from defense to offense,鈥� says Jonathan Czin, a fellow in the John L. Thornton China Center at the Brookings Institution in Washington.
Mr. Xi, by standing firm and hitting back at each U.S. trade barrier 鈥� repeatedly leading Mr. Trump to back down 鈥� forced a painful reckoning, experts say. It only made sense for both sides to try to de-escalate.
鈥淏oth leaders saw what rapid and full decoupling could look like in April, and they both said 鈥� 鈥業 don鈥檛 think so,鈥欌�� says Christopher Johnson, the chief executive of China Strategies Group, a political risk consultancy, and a former top China analyst at the CIA. 鈥淲hen you look over that precipice, it is not a good look,鈥� he said during an Asia Society Policy Institute webinar.
The path to stronger cooperation?
Indeed, it was Beijing鈥檚 ability to fight its way to a stalemate with Washington that paved the way for meaningful negotiations, potentially leading to a broader reset of the U.S.-China relationship.
Chinese leaders went into Thursday鈥檚 meeting with 鈥渁n unprecedented sense of confidence and empowerment,鈥� says Yun Sun, director of the China Program at the Stimson Center.
While they expect the long-term strategic rivalry with the U.S. to continue, they view Mr. Trump as potentially their last best hope for backing cooperation over competition, China experts say.
They believe that, unlike China hawks in the Republican and Democratic political establishments, 鈥淭rump has defined China as a country to work with,鈥� says Ms. Sun.
Reflecting this, Mr. Xi made an unprecedentedly positive reference to Mr. Trump鈥檚 MAGA slogan.
鈥淐hina鈥檚 development goes hand-in-hand with your vision to Make America Great Again,鈥� Mr. Xi said. 鈥淐hina and the United States should be partners and friends.鈥�
In a sign that they expect their dialogue to continue, the two leaders exchanged invitations for official visits to their respective countries. Mr. Trump said he will visit China in April, with Mr. Xi coming to the U.S. later next year.
Mr. Trump said the two leaders had a wide-ranging discussion that covered other pressing international issues, including a lengthy exchange on the war in Ukraine. 鈥淲e are going to work together to try and get the war with Russia and Ukraine solved,鈥� he said.
The contentious topic of Taiwan, the self-governing island off China鈥檚 coast over which Beijing claims sovereignty, 鈥渘ever came up,鈥� Mr. Trump said.
Overall, Mr. Trump was effusive about the meeting, calling it 鈥渁 great success.鈥�
鈥淔or two very large, powerful countries 鈥� that is the way we should get along,鈥� he said.
