The Trump–Xi summit: less a deal, more an uneasy truce

If the aim of the 30 October meeting between United States President Donald Trump and Chinese President Xi Jinping, in Busan, South Korea, was to ease trade tensions, it can be judged as just about achieved. US ‘fentanyl tariffs’ on China were halved to 10%, bringing US tariff levels on imports from China closer to those applied to other Asian economies.

In return, China agreed to resume US soybean imports – hardly a breakthrough – and, more importantly, to postpone export controls on five rare earth elements (REEs) announced earlier in October. However, separate Chinese export controls announced in April on seven REEs, including gallium and germanium, both critical for the defence and semiconductor industries, remain firmly in place. In other words, Trump has not managed to turn back the clock on REEs, leaving China with a potent strategic lever for future disputes.

However, China’s upper hand in this deal is more limited than it might have hoped. Xi might have wanted to raise the question of Taiwan and secure a US assurance that it would not support formal Taiwanese independence, but this did not materialise. Beijing also pushed for Washington to lift export controls on Nvidia’s latest artificial intelligence semiconductors (the Blackwell B30A), but Trump appears to have stood firm.

Finally, the US-China agreement arising from the meeting carries a one-year expiration date, underscoring its fragility. Based on precedent, it could unravel sooner – perhaps abruptly – should either side choose to withdraw. To hearten markets that had been expecting more substantial progress on market access and Chinese investment in the US, Trump said that he would visit Beijing in April.

It therefore looks like the US and China have agreed a truce, for now. Markets have reacted with justified caution. Yet investors may still be underestimating the risks of Trump’s shift from economic to hard-power coercion. Hours before meeting Xi, Trump ordered the Pentagon to resume nuclear testing – last done in 1992. 

This shift should not be a surprise. China has been expanding its nuclear arsenal, but the US maintains clear superiority in nuclear capabilities. Trump may seek to use this advantage to tighten alliances. Two recent announcements reinforce this interpretation: the US commitment to the Australia – United Kingdom – US (AUKUS) security arrangement, and US approval of a South Korean nuclear submarine, both announced shortly before the Busan meeting.

Overall, the summit avoided the worst outcomes – no direct clash over Taiwan, no new deal on advanced chips – but it still revealed US vulnerability in using economic pressure against China. The US gains are minimal (soy exports and a partial reprieve on REE restrictions) and come at the cost of exposing economic dependence on China. Meanwhile, China retains its supply-chain advantage, though with heightened awareness that the stakes – and the mutual mistrust – are higher than ever. China may have a short-term tactical edge, but Trump’s pivot toward overt military signalling could mark a more dangerous phase.