U.S. President Donald Trump and Chinese President Xi Jinping have agreed to a trade truce under which the U.S. will ease tariffs, Beijing will resume imports of U.S. soybeans, delay the introduction of export restrictions on some rare earth metals and step up efforts to curb illegal fentanyl trafficking.
After meeting with Chinese President Xi Jinping in Busan, South Korea on Thursday, their first face-to-face meeting since 2019, President Trump said the meeting was the culmination of a five-day trip to Asia.
President Trump told reporters, “I think it was a great meeting.”
Here are some important points:
Trump and Xi’s meeting was shorter than expected
The meeting between President Trump and President Xi Jinping was short, lasting about an hour and 40 minutes, which surprised some officials.
Xiang Guo, a partner at Shanghai-based consultancy Hutong Research, said the “shorter-than-expected” talks likely suggested that both sides were limiting discussions to previously resolved topics.
No official date has been announced, but Trump has previously suggested the talks could last up to four hours.
But Trump said the overall outcome was “excellent,” adding that the meeting was “a perfect 10 out of 12.”
this is not a trade agreement
In exchange, the two countries agreed to a “truce” in the trade war that has raged over the past year.
Deborah Elms, director of trade policy at Singapore’s Heinrich Foundation, told Al Jazeera that the deal could be seen as a “partial freeze” or “minor setback” in the US-China trade war.
Both countries agreed on the following for a period of one year: It is then renegotiated and updated.
China has agreed to postpone export restrictions on five rare earth metals announced this month. However, restrictions on a further seven cases announced in April will remain in place. Rare earth metals are used to make many important products, from smartphones to jet aircraft. Trump said Xi would “do everything in our power to stop the flow” of fentanyl, a powerful synthetic opiate. “I believe they are taking really strong action,” he added. As a result of the Chinese government’s commitment to fentanyl, the U.S. government announced it would cut its 20% fentanyl-related tariffs in half. Overall, this would reduce tariffs on Chinese goods from 57 percent to 47 percent, but analysts say this is not a particularly large reduction. China’s tariffs on US products average 32%. The US president also said that China’s purchases of US soybeans would resume immediately. China will suspend countermeasures related to Washington’s 301 investigation for one year. 301 investigation refers to a U.S. investigation based on Section 301 of the Trade Act. The article allows the U.S. government to impose tariffs and other measures against what it deems unfair trade practices by China, such as state subsidies, forced technology transfers and intellectual property violations. China’s Ministry of Commerce also said the United States has halted plans to expand technology-related export controls on its Chinese subsidiaries, and the two countries have agreed to suspend retaliatory port fees. President Trump is scheduled to visit China in April, and Xi is expected to visit the United States “later.” President Trump said the U.S. and China agreed to “cooperate” on the war in Ukraine, but the issue of Taiwan, which China claims as sovereignty, was not addressed.
President Trump signals willingness to discuss China’s access to US technology
Semiconductors, which are critical to the development of artificial intelligence (AI), have been a major source of tension between the US and China since the administration of former US President Joe Biden imposed export controls on US-made semiconductors to limit China’s access to advanced chips used in AI development.
One of the most high-profile companies in the dispute is Nvidia, a major U.S. chipmaker whose processors power most of the world’s AI systems.
Nvidia’s new Blackwell AI processors, announced this year, are considered central to the company’s advantage in the global AI race and are among the technologies restricted by U.S. export rules.
Nvidia CEO Jensen Huang said China’s reliance on American hardware for AI is good for the United States and tried to persuade the Trump administration to ease regulations.
During his meeting with Xi, President Trump discussed semiconductor trade with China, but said Blackwell Processors was not involved in those discussions. “China is going to talk to Nvidia and others about taking back the chips,” he said, adding, “We’re not talking about Blackwell.”
The rare earth moratorium is a victory for President Trump.
China’s agreement to postpone export restrictions on rare earth metals represents another key area of strategic importance in the U.S.-China relationship, which, like semiconductors, sits at the intersection of trade, technology, and national security.
Details of the deal have not yet been made public, but analysts say it could be a major “win” for Mr. Trump.
“Rare earths are essential to the production of everything from smartphones to headphones, and of course military defense weapons, fighter jets and tanks,” Al Jazeera’s Katrina Yu said in an interview from Beijing. “This is a national security issue for President Trump, and the problem for him is that China dominates this industry.”
China produces more than 70% of the world’s processed rare earth metals and rare earth magnets, according to the Washington, D.C.-based Center for Strategic and International Studies.
Yu added that even if a deal is reached, China is still likely to “use rare earths as leverage in future negotiations with the United States.”
Why soy and fentanyl are important
Soy and fentanyl have long been a flashpoint in U.S.-China relations, emblematic of the economic and political interests of both sides.
Soybeans are the top agricultural product exported overseas by the United States, and China is one of the top buyers. In this year’s trade war, in which China and the United States slapped each other with tariffs of more than 100% before agreeing to a moratorium in May, China halted purchases of U.S. soybeans, plummeting exports and hurting farmers in the U.S. Midwest, a key political base of President Trump.
Resuming purchases from China would provide both an economic boost and a symbolic political victory for the Trump administration. But Chicago soybean futures fell after the summit as traders were disappointed by the lack of concrete details on agricultural initiatives.
Fentanyl, a highly addictive drug 50 times more potent than heroin, remains at the center of America’s opioid crisis and contributes to tens of thousands of overdose deaths each year. The U.S. government has repeatedly accused Chinese suppliers of exporting precursor chemicals used in manufacturing.
China had previously pushed back against Trump’s accusations, saying it had gone above and beyond to meet its drug control obligations.
China “does not seek to replace any country”
Chinese state media reported Thursday that President Xi told President Trump that China does not seek to challenge or replace other countries, but instead focuses on “doing its own business well.”
He described China’s economy as an “ocean”, adding that the country is confident and capable of dealing with all kinds of risks and challenges.
Xi said that China-US relations remain generally stable, and teams from both sides need to elaborate and follow up on the agreements reached.
Xi reportedly called on both sides to “focus on the long-term benefits of cooperation, rather than falling into a vicious cycle of retaliation.”
The Chinese government also confirmed that President Trump will visit China next year.
In response to questions from reporters, President Trump did not provide details about this part of the meeting, but emphasized the size of the potential trade.
The issue of China’s access to Nvidia chips remains a key point of tension in the US-China tech sector.
How successful was the summit meeting between President Trump and President Xi?
Einar Tangen, a senior fellow at Beijing’s Taihe Institute, said President Trump’s decision to ease tariffs on Chinese goods from 57% to 47% “makes no sense.”
“Any economist will tell you that tariffs above 30% effectively mean stopping trade,” Tangen told Al Jazeera.
“This seems to me to indicate that we didn’t make as much progress (in the talks) as Donald Trump is trying to imply,” he added.
Tangen said Beijing would have liked the Trump administration to lower tariffs to 20% or 25%, or “at most” 30%, bringing them “on par with the rest of the world.”
He added that until a joint communiqué is released, it will be difficult to assess how successful the talks actually were.
