BUSAN, 31 October 2025: The United States and China reached a significant de-escalation in their ongoing trade war on Thursday, with Presidents Donald Trump and Xi Jinping agreeing to a temporary tariff truce, heightened cooperation on narcotics, and tentative steps on technology sales during a high-stakes meeting in Busan, South Korea. The agreement, which defers several major trade restrictions, signals a much-needed stabilisation in the relationship between the world’s two largest economies.
Fentanyl and Trade Tariffs Eased
The cornerstone of the deal is a mutual step back from looming punitive measures. On fentanyl, President Trump announced that he expects to lower the 20% tariffs previously imposed on Chinese goods related to the crisis, with reports indicating a reduction to 10%. This concession is in exchange for a commitment from Beijing to enforce stricter controls on the export of precursor chemicals used in the synthetic drug’s production.
Crucially, the threat of escalating tariffs was put on hold. China has agreed to postpone for one year its recently imposed export controls on rare earth elements, strategic minerals vital for defence and high-tech manufacturing. In return, the US will withdraw its threat of an additional 100% tariff on various Chinese imports that was slated to take effect on November 1st, effectively averting a trade embargo.
Technology and TikTok Addressed
The talks also addressed high-tech sectors. President Trump expressed an openness to allowing China to purchase a version of Nvidia’s advanced Blackwell AI semiconductor chips as part of the broader trade framework. Furthermore, the meeting was expected to finalise the divestiture of Chinese firm ByteDance’s majority stake in the social media platform TikTok to an American consortium, resolving a major US national security concern.
Context and Future Outlook
This summit, held on the sidelines of the Asia-Pacific Economic Cooperation (APEC) meeting, was the first face-to-face discussion between the two leaders since Trump began his second term. The prior months had seen an intense escalation of trade frictions, with both nations imposing reciprocal tariffs and export controls that impacted global supply chains and strained their economic relationship.
Beyond tariffs, China also agreed to resume purchases of American soybeans, providing a boost to US farmers. While geopolitical flashpoints like the Ukraine conflict and Taiwan were reportedly on the agenda, the primary focus remained on establishing a pathway for economic stability and cooperation, with more concrete achievements expected during a planned follow-up visit by President Trump to China early next year.
