China urges co-operation as Trump, Xi agree to pause trade war

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U.S. President Donald Trump and Chinese leader Xi Jinping agreed to reduce tariffs and export restrictions Thursday, stepping back from a trade war that has roiled the global economy.

The two leaders met in the South Korean city of Busan, their first in-person encounter since 2019. Mr. Trump told reporters afterward that the U.S. would reduce total tariffs on Chinese imports to 47 per cent by halving a 20-per-cent punitive levy imposed in response to fentanyl, after Beijing promised “strong action” to stop the sale of precursor chemicals related to the deadly drug.

For its part, China will resume purchases of “tremendous amounts” of U.S. soybeans, Mr. Trump said, a key priority for American farmers, and suspend controls on the export of rare earths announced this month, which threatened to derail Thursday’s meeting.

The mutual pullback would effectively return the economic relationship between the countries to something like its state before Mr. Trump escalated his trade war on China. But trade ties between the two economies, the two largest in the world, are still under evident strain.

In a statement, China’s Commerce Ministry said the two sides had reached a “consensus” on tariffs, including extending a truce agreed to in May after a round of tit-for-tat escalations drove up levies to more than 100 per cent, which would have essentially ended trade between the countries. The current agreement was set to expire on Nov. 10 and will now run until October, 2026.

Mr. Trump described Thursday’s talks with Mr. Xi as “amazing,” rating them “12 out of 10.”

“I was extremely honoured by the fact that President Xi authorized China to begin the purchase of massive amounts of soybeans, sorghum, and other Farm products,” he wrote on social media Thursday. “Our Farmers will be very happy!”

The meeting happened a day before Prime Minister Mark Carney was scheduled to have his own sit-down with Mr. Xi.

Mr. Carney’s courting of the Chinese leader is an abrupt change of course in Ottawa’s approach to China, a country Ottawa publicly characterized less than three years ago as an “increasingly disruptive” global power.

But Mr. Trump’s protectionism is driving U.S. allies to look far and wide for new markets, including those that countries such as Canada have often criticized for human-rights abuses. More than 5 per cent of Canadian exports head to China, making it among the country’s top foreign markets, but that’s still far less than the 75 per cent of exports purchased by the United States.

It was just last year that former prime minister Justin Trudeau’s government followed Washington’s lead and imposed 100-per-cent tariffs on Chinese electric vehicles, starting a trade war with Beijing that is now hurting Canadian farmers and fishermen, with China imposing retaliatory levies on canola, pork and seafood.

Carney to meet with Xi, as Trump refuses further trade talks

As trade war drags on, Canadian canola farmers sit on a mountain of seed

Mr. Xi’s agreement with Mr. Trump is in some ways a demonstration of the leverage China can exert over agricultural markets. China agreed to buy 12 million metric tons of U.S. soybeans through January, and to purchase 25 million tons annually for the next three years, U.S. Treasury Secretary Scott Bessent told Fox Business Channel’s Mornings with Maria program.

He also said China had approved an agreement to bring video app TikTok under U.S.-controlled ownership, and he expected it to move forward in coming months.

According to an official Chinese readout of the meeting, Mr. Xi said that the “recent twists and turns in Sino-U.S. economic and trade relations have provided lessons for both sides.”

“Economic and trade relations should continue to be the ballast and engine of Sino-U.S. relations, not a stumbling block or point of conflict,” he added.

Both sides, he added, “should consider the long-term benefits of co-operation and avoid falling into a vicious cycle of mutual retaliation.”

Nick Marro, lead analyst for global trade at the Economist Intelligence Unit, or EIU, said it was “not just the U.S. and China that are breathing a sigh of relief, but the entire world.”

Had China fully implemented its threatened export controls on rare earths, which are vital to the production of advanced electronics, “it would have had repercussions for global industry, including for markets like the EU,” he said. “So walking back from the brink is a win.”

Han Lin, China director at the Asia Group, a Washington-based advisory firm, said the Trump-Xi meeting “represents more of a tactical pause than a strategic breakthrough.”

“Yet though the core issues of the U.S.-China rivalry – such as technology controls, supply chain tensions and security frictions – remain unresolved, even a temporary truce is better than an uncontrolled trade war,” he said.

Both leaders went out of their way to praise each other and avoid contentious issues unrelated to trade. Mr. Trump praised Mr. Xi as a “very tough negotiator,” joking this was “not good” for him, but that they “have a great relationship.”

In turn, Mr. Xi said it was a “great pleasure” to see Mr. Trump again, adding China’s development “goes hand-in-hand with your vision to Make America Great Again.”

In a rarity for high-level U.S.-China meetings, the issue of Taiwan – the U.S.-backed island democracy claimed by China – did not come up.

“It was not discussed actually,” Mr. Trump told reporters on Air Force One as he travelled back to Washington. The readout of Mr. Xi’s remarks – typically far less detailed than U.S. accounts – also did not mention Taiwan.

Mr. Bessent said Washington will suspend for one year new restrictions that make it harder for Chinese firms to use affiliates to buy off-limits technology. But the two leaders otherwise seem to have skirted the issue of advanced computer chips. The U.S. has been limiting exports of them to China, stifling some of the country’s high-tech industries, including those focused on artificial intelligence.

Trump says trade agreement with South Korea ‘pretty much finalized’

Mr. Trump acknowledged China’s desire to import more chips from Nvidia, suggesting Washington could act as a “referee” in such talks, but said the company’s most advanced Blackwell chip had not come up, before he was interrupted by an aide who said discussions with Mr. Xi had focused on Chinese rare earth controls.

One issue that seemed poised to potentially derail Thursday’s meeting was Mr. Trump’s announcement, minutes before Mr. Xi arrived in Busan, that the U.S. would resume nuclear testing in response to measures taken by China and Russia to strengthen their respective atomic arsenals.

Mr. Trump said he would “like to see a denuclearization,” but given “other countries’ testing programs” it was “appropriate” to begin testing “on an equal basis,” for the first time in more than 30 years.

China has greatly expanded its nuclear arsenal in recent years, and now has an estimated 600 warheads, far behind the 3,700 operated by the U.S. or Russia’s estimated 5,460, according to the Federation of American Scientists. None of the three powers have tested a nuclear weapon since 1996, though Russia has recently expanded testing of launch devices.

Beijing maintains a “no first use” nuclear policy, but has previously resisted joining denuclearization talks between Moscow and Washington – which have essentially been abandoned since the war in Ukraine – pointing to the relative size of its arsenal.

Speaking to reporters Thursday, a spokesman for China’s Foreign Ministry said Beijing hoped the U.S. would abide by its current moratorium on nuclear device testing and maintain global strategic harmony and stability.

Mr. Trump said he will visit China in April, a trip confirmed by Beijing, after which Mr. Xi will travel to the U.S. This schedule could help relations ”remain stable, at least until the first quarter of next year,” said Mr. Marro, the EIU analyst.

“But there’s still a lot of volatility, and importantly, U.S.-China relations are increasingly entering this cyclical phase, whereby we see a temporary period of calm, and then something reignites tensions, and then frictions restart all over from the beginning,” he said.

“I think that’s very much the new normal that we need to get used to, particularly over the next three years of Trump’s term.”

With reports from Reuters and Steven Chase