In a pivotal meeting that could reshape the trajectory of global trade dynamics, U.S. President Donald Trump and Chinese President Xi Jinping agreed to a one-year truce on trade after months of rising tensions between the world’s two largest economies. The détente, reached during an in-person summit in Busan, South Korea, on October 30, 2025, aims to de-escalate a prolonged standoff that had led to damaging tariffs and heightened geopolitical risks.
The summit marked President Trump’s first in-person meeting with President Xi during his second term and capped a weeklong tour of Asia, which included the announcement of new trade agreements with South Korea, Malaysia, and Cambodia. Their high-stakes 90-minute discussion came amid growing concerns over a potential return to full-blown economic confrontation, triggered most recently by threats of additional U.S. tariffs and sweeping Chinese controls on the export of rare earth elements.
In their opening remarks, the leaders struck a conciliatory tone. Trump lauded Xi as a "great leader of a great country," while Xi acknowledged their differences but emphasized that tensions were natural between two global powers. "In the face of winds, waves, and challenges, you and I should stay the right course and ensure the steady sailing forward of the giant ship of China-U.S. relations," said Xi.
A centerpiece of the accord is the extension of a limited tariff pause, originally implemented in May and renewed in August, that was set to expire on November 10. Trump agreed to reduce a punitive 20% tariff on Chinese goods originally imposed over Beijing’s alleged inaction on fentanyl precursors down to 10%, with the overall average tariff rate dropping from 55% to approximately 45%.
Trump also postponed a proposed 100% tariff hike on Chinese imports after China agreed to halt the implementation of its most restrictive rare earth export rules. Both sides also agreed to suspend reciprocal port fees that had been introduced earlier in October. The U.S. will pause its tariffs on Chinese-built, owned, or operated vessels, while China will halt its “Special Port Service Fee” on American maritime transport.
Perhaps the most geopolitically significant concession from Beijing was its agreement to suspend, for one year, its latest suite of rare earth export controls. These Chinese measures would have had sweeping implications extending regulation not just to domestic exports but to foreign products with even minor Chinese rare earth content.
Rare earths, critical inputs for smartphones, electric vehicles, military applications, and green technologies, have been a key pressure point in the trade battle. China dominates the global supply chain, accounting for most of the world’s mining and refining capacity. Industry and government figures worldwide had expressed alarm over China's escalating use of these materials as economic leverage.
China’s Ministry of Commerce confirmed the delay, noting that both leaders agreed to use the coming year to finalize a longer-term framework for cooperation while allowing global buyers to prepare alternative supply chains.
“The narrative around Chinese control of resources won’t change just because the export controls are delayed by a year,” said David S. Abraham, a rare earths expert at Boise State University. “But this truce buys more time.”Economic analysts echoed this cautious optimism. Julian Evans-Pritchard of Capital Economics stressed that while the agreement removes the immediate risk of sharp tariff increases, it does not address the deeper strategic rifts between the two powers. “Tensions could easily flare up again,” he warned.
Trump also announced that China would resume purchasing American soybeans in “large quantities,” reversing a sudden halt earlier this year that had devastated U.S. agricultural exports. The move is seen as a nod to Trump’s electoral base in rural states and a potential lifeline for U.S. farmers as the 2026 electoral season looms.
Semiconductors were also discussed, though with less clarity. Trump hinted at potentially easing restrictions that currently prevent U.S. chipmaker Nvidia from selling its advanced AI-focused chips to Chinese firms. The administration previously blocked exports of Nvidia’s Blackwell B30A chip over national security concerns. While Trump noted that the matter required further discussion, it raised alarm among policy experts who fear potential security risks.TikTok, the Chinese-owned social media app that has faced regulatory scrutiny in the U.S., was briefly mentioned by Chinese state media, but no formal agreement or update emerged. The White House has claimed for weeks that a deal to separate TikTok from parent company ByteDance is near, though concrete steps remain elusive.
The truce sent ripples through the markets. Rare earth stocks, which had surged amid rising tensions, fell sharply on the news. Australia’s Lynas Rare Earths dropped 3.2%, while Arafura Rare Earths plunged nearly 7%, as political risks around Chinese supply dominance slightly abated.
Nonetheless, long-term strategic concerns persist. The G7 nations are expected to unveil a critical minerals alliance to build an alternative supply chain outside China. Measures under consideration include strategic stockpiling, long-term purchase agreements, and price guarantees aimed at incentivizing non-Chinese production. China’s dominance in rare earth refining is set to remain formidable. According to the International Energy Agency, China will retain a majority share of global rare earth processing through at least 2030, though the U.S., Australia, and others are investing aggressively to diversify supply.
Though President Trump hailed the summit as a “great meeting” with “a lot of finalization,” many observers remain skeptical that this truce will mark the beginning of a lasting reset in U.S.-China relations.
For now, the truce is seen as a necessary reprieve, giving both economies and global markets breathing room. Trump is expected to visit China in April 2026, with Xi scheduled to travel to the U.S. later in the year, potentially to Florida or Washington. But with unresolved disputes in technology, maritime policy, and ideology, and as both countries prepare for key leadership decisions in 2026 and beyond, the possibility of renewed confrontation remains ever-present.