The appointment is in Gyeongju, South Korea. It is there that tomorrow the American president, Donald Trump, and his Chinese counterpart, Xi Jinping, will see each other again for the first time since 2019. And it is there that the economic relations between the two superpowers and indeed the global geopolitical balance could be redesigned.
After some back and forth, with Trump’s threat not to see Xi anymore, the meeting was confirmed today by the American president himself. On the agenda there are duties, technology and critical raw materials, but above all a strategic turning point: the possibility of ending a cycle of tensions that has lasted for seven years now. Possibility and far from certainty, given the fluctuations that relations between Washington and Beijing have had recently.
Last act, October 10th, when Trump threatened further 100% tariffs on China on Truth starting from November 1st. Beijing’s crackdown on exports of rare minerals triggered the US reaction. An act defined as “very hostile” by the American president.
With Trump’s return to the White House, the United States has tightened tariffs against China and thus reopened a front that Phase 1 of the 2020 trade agreement between Washington and Beijing had only temporarily frozen. The new measures have particularly affected the most strategic sectors for the Chinese economy and for the energy transition: 100% rates for electric vehicles, duties to discourage the importation of low-cost Chinese models; 50% on lithium batteries and components, and on solar panels; 25% on special steel and aluminum, tungsten and polysilicon.
The increases come on top of tariffs introduced since 2018, when the first Trump administration imposed 25% tariffs on hundreds of billions of dollars of Chinese products, and opened the largest trade war in decades.
To date, more than $370 billion in Chinese exports to the United States remain subject to punitive tariffs, despite some exemptions being extended until May 2025.
So what could emerge tomorrow in the meeting between Trump and Xi? According to diplomatic sources, Washington is aiming for a “truce” agreement that includes: a selective reduction in tariffs on consumer goods and industrial components, Chinese commitments on agricultural purchases (soya, corn, beef), and a more open dialogue on intellectual property and technology.
China, however, is expected to seek the removal of higher tariffs and an easing of US controls on the export of semiconductors, batteries and advanced machinery.
These in detail are the topics that will be on the table.
– Rare earths. It is a strategic sector dominated by China, which controls 70% of the world’s refining, essential for production in the defense, automotive and consumer electronics sectors. Beijing has imposed sweeping restrictions on exports of related materials and technologies.
Trump quickly announced 100% tariffs on all Chinese goods, which are expected to take effect on Saturday. But the American president softened his rhetoric and appeared optimistic about an agreement.
Investors are hoping for a sign of détente, although no one expects a broad agreement. A simple joint declaration committing the two countries to freezing new increases would already be considered a step forward. A broader agreement that reduces part of the duties and guarantees permanent dialogue channels could instead revive the confidence of global markets and restore oxygen to supply chains, currently under stress due to rising costs and geopolitical tensions.
– Fentanyl. The US accuses Beijing of not doing enough to stop the trafficking of fentanyl and other opioids destined for the American market, and as punishment imposed 20% tariffs on Chinese goods in March. Beijing has rejected the accusations, assured maximum collaboration but also warned that tariffs will not solve the drug trafficking problem.
– Soy. Beijing retaliated for the fentanyl tariffs with levies on American agricultural products, including soybeans. More than half of the soybeans produced in the United States were exported to China last year, but Beijing halted all orders as the trade dispute took hold. Last weekend there were preliminary talks in Malaysia and Beijing, US Treasury Secretary Scott Bessent said, agreed to return to buying US soybeans.
– Ukraine. Trump himself has announced that he intends to talk to Xi about it, with China insisting on presenting itself as a neutral actor. The United States has put pressure on Beijing, as well as India, to curb purchases of Russian oil, which Washington and Kiev say finance Moscow’s war machine.
– Taiwan. Total sovereignty over the island claimed by Beijing has long been a sore point in bilateral relations. China considers the self-ruled democratic island part of its territory and has not ruled out using force to bring it under its control. Washington does not recognize Taipei’s autonomy, but supplies it with weapons for self-defense. And Secretary of State Marco Rubio has assured that he will not sell out Taiwan in exchange for a trade agreement with China. But Beijing would demand an explicit declaration that the United States opposes Taiwan’s independence. Chips and artificial intelligence. Beijing has been boosting its chip industry to circumvent Washington’s export restrictions. Yesterday the CEO of US chip giant Nvidia, Jensen Huang, urged Washington to allow chip sales to China so that Silicon Valley can remain a global artificial intelligence powerhouse.
– TikTok. Also in the balance is the fate of social media platform TikTok, whose U.S. operations Washington has sought to wrest from the hands of Chinese parent company ByteDance, citing national security concerns. Expectations for a deal are high. Trump signed an executive order last month that put American TikTok under the control of a group of US investors, many of them his allies. As announced by Bessent, the agreement will be ratified tomorrow.