Asia ASAP: Trump and Xi Meet in Busan

ASPI Expert Commentary from Wendy Cutler, Rorry Daniels, and Neil Thomas.

What Happened

On Thursday, U.S. President Donald Trump and Chinese President Xi Jinping met for a highly anticipated 90-minute face to face meeting in Busan, South Korea. The meeting marked the final engagement of Trump’s nearly week-long Asia tour, during which he also made stops in Kuala Lumpur for the ASEAN Summit and Tokyo. After the meeting with Xi, Trump announced that the two leaders had de-escalated their trade standoff, agreeing to a yearlong ceasefire that would roll back steep tariffs and reopen U.S. access to Chinese rare earth metals, among other things.

In this first edition of Asia ASAP, Asia Society Policy Institute experts provide their rapid reactions to the summit outcomes. Subscribe for access to more expert analysis of breaking news events across the Asia-Pacific.

A One-Year Trade Truce

- By Wendy Cutler

The long-awaited Trump-Xi meeting was an important step in stabilizing the U.S.-China bilateral relationship by turning down the temperature on recent escalatory actions by both countries for at least one year.

However, the announced outcomes do little to resolve underlying structural issues that are at the heart of bilateral economic tensions, including exports of excess capacity manufactured goods, excessive subsidies and other types of state support, and unfair trade practices. As such, this truce, while intended to last one year, may not even last that long.

Unlike the Phase One U.S.-China trade agreement concluded during Trump’s first term, this time around Beijing drove a hard bargain insisting on getting paid for every concession it made. Specifically, Beijing succeeded in getting the U.S. to reduce existing tariffs by ten percentage points, delaying for one year the export control affiliates rule and unwinding its Section 301 actions on ports, including high fees for Chinese ships.

This is in sharp contrast to the other trade agreements that Trump has concluded with Asian partners in recent days, which were heavily tilted in the U.S.’ favor. Trump has met his match with China, which has shown that two can play at this game. Beijing has clearly demonstrated it knows its leverage points and is willing to activate them.

It’s welcome news that Beijing agreed to hold off implementing its recently announced sweeping rare earth export restrictions for one year. However, we should expect Beijing to use this threat as a hammer over the U.S.’ head, making U.S. tariff threats less credible and more costly going forward.

Moreover, U.S. farmers will be glad to hear that China will resume significant purchases of soybeans, but the actual dollar amounts have yet to be announced. Finally, it’s welcome news that China will take further unspecified steps on curbing fentanyl precursor exports.

This one-year truce will give breathing room to both sides to reduce dependencies on each other in strategic sectors. For the U.S., this means stepping up work with allies and partners to develop alternative sources of rare earths, building on the multiple bilateral agreements with Australia, Malaysia and others announced in recent weeks, including by linking them together in a plurilateral critical minerals agreement.

Will the Stabilization Last?

- By Rorry Daniels

Presidents Trump and Xi succeeded in stemming the active bleeding in the relationship, but whether the bandage will stick remains to be seen. It’s very positive and stabilizing when the leaders meet and confirm that neither side wants to destroy the other, but the groundwork hadn’t been laid for this meeting to produce more than a vibe check. The post-meeting comments and announcements don’t reach the status quo ante on trade or detail specific commitments on security issues.

President Trump’s announcement of U.S. resumption of nuclear testing is both reflective of long-standing U.S. frustration on China’s nuclear build-up as well as potential leverage to encourage arms control talks. However, the key priority remains ending the war in Ukraine, and President Trump’s expectations that he will receive genuine support from China on this issue have been raised. China now has to flesh out its commitments and deliver.

The U.S has work to do as well. What needs to happen next to maintain the stabilization is a period of trust building where both sides detail and deliver on their commitments and create the conditions for more substantive discussions. This means that both sides need to have full control of their respective bureaucracies and at minimum pursue a ‘no surprises’ policy. China would be wise to lift its sanctions on National Security Advisor and Secretary of State Marco Rubio so that security issues can be covered in subsequent rounds.

However, the structure of a year-to-year agreement suggests that continuous negotiation will be a permanent feature of U.S.-China relations moving forward, with high potential to revive cycles of tit-for-tat escalation when one side or the other feels its expectations are not being met. Odds remain high that all the associated market and political volatility we have seen over the last nine months continues indefinitely as political priorities shift and events occur that require the U.S. or China to react. And evidence to date suggests that officials in the second Trump administration are unwilling or unable to constrain the president from issuing threat or punishment via social media while they work to strike a durable deal.

Taipei may be breathing a sigh of relief today that Taiwan wasn’t raised in the meeting, but discomfort could eventually set in about why it didn’t come up and what its absence in Beijing’s agenda for this leaders’ meeting means for China’s Taiwan policy moving forward. Frankly, no news is probably good news in the Taiwan Strait. The rounds of negotiations leading up the meeting were run by Treasury Secretary Scott Bessant and his counterpart He Lifeng, rather than the national security officials who would focus on strategic issues like Taiwan policy. Of course, Xi could have raised the issue anyway and Trump seemed prepared for him to do so. However, Xi may not have wanted to be in a position where adverse comments on Taiwan would force him to take actions in the Taiwan Strait as a political signal, especially with the churn of leadership at high levels in the PLA.

Buying Time for Beijing

- By Neil Thomas

Xi is finally getting the “new type of great power relations” he sought between China and the United States when he first took office in 2012. Trump is dealing with China as a fellow superpower, and he clearly respects Xi’s status as a powerful leader on the world stage. Direct communication between the American and Chinese presidents can reduce risks, clarify red lines, and create space for selective cooperation; efforts to build a more peaceful and prosperous world—and greater stability—should be welcomed.

Yet little has changed in the broader, structural picture of bilateral relations. The two sides have not resolved the fundamental economic and technological conflicts that underpin U.S.-China strategic competition, from market access and data governance to export controls, supply-chain security, and the race to dominate critical technologies. Frictions will persist, still, even if the tone improves. It is not all plain sailing ahead. Beijing could use this diplomatic truce to buy time to build the bureaucratic capacity necessary to implement rare earth and other strategic export controls in a more calibrated, effective fashion. That will give China additional leverage in future U.S.-China negotiations.

Dive Deeper with ASPI:

• Sign up for a rapid-response webinar, “Assessing Trump’s Asia Tour,” to be held October 31, 8:30am U.S. Eastern Time. The panel discussion will feature Wendy Cutler, Shay Wester, Michelle Ye Hee Lee, and Emma Chanlett-Avery.

• Based in NYC? Please join ASPI for an in-person program on November 4, “After Gyeongju: APEC 2025 Outcomes and the Future of Regional Cooperation,” featuring Chul Chung, Richard Cantor, Daniel Russel, and Wendy Cutler in a panel discussion. ROK Ambassador to the U.S. Kang Kyung-wha and U.S. Senior Official for APEC Casey Mace (pending) will provide keynote remarks.

• Read Neil Thomas’ recent op-ed for Time, “Why the Trump-Xi Summit May Disappoint.”