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A much-awaited Xi and Trump meeting is likely to be held at Kuala Lumpur, Malaysia. The top leadership is trying hard to reverse the trade war and achieve an amicable solution for China’s rare earth controls and U.S. technology export curbs.
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New Delhi: In an attempt to de-escalate the ongoing trade war between the United States and China, top economic officials from both countries will meet in Kuala Lumpur, Malaysia, on Saturday, October 25.
The talks are taking place during the ASEAN summit and are primarily aimed at paving the way for a meeting between US President Donald Trump and Chinese President Xi Jinping next week in South Korea.
Both countries had tried to pacify the tensions that escalated after Trump imposed tariffs on Chinese goods. But the fray truce could not hold longer, as China also put curbs on the exports of its rare earth minerals and even restricted other countries from exporting their rare earth minerals to the USA.
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In retaliation, pompous Trump has warned that the US will impose new tariffs of up to 100% on Chinese goods starting November 1 if China does not lift its new export controls on rare earth minerals and magnets.
This move is in response to China's decision to impose stricter restrictions on the export of rare earth products—minerals crucial for defense and high-tech industries.
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Simultaneously, the US has added a large number of Chinese companies to its export blacklist, effectively barring trade with thousands of firms. These actions have undermined the 90-day trade truce that was painstakingly maintained through four rounds of meetings from May to September.
The US delegation will include Treasury Secretary Scott Bessent and Trade Representative Jamison Greer, while the Chinese side will be led by Vice Premier He Lifeng. Their goal is to reach an “intermediate ceasefire” agreement before the potential meeting between the two leaders.
According to experts, if no agreement is reached on rare earth exports and US technology restrictions during this meeting, the Trump-Xi Jinping meeting itself could be jeopardized.
Josh Lipsky, an economic analyst at the Atlantic Council, says the meeting will only be successful if both sides agree to reinstate the temporary truce established over the summer. He says, “The US wants China to lift its rare earth restrictions, but this is China’s biggest leverage tool, so it may be hesitant to give it up.”
The US administration has already announced a new tariff investigation, alleging that China has not complied with the terms of the 2020 “Phase One” trade agreement. In that agreement, China promised to purchase large quantities of American agricultural, energy, and manufactured products, but that target was never met.
If the Kuala Lumpur meeting does not yield concrete results, it is likely that triple-digit tariffs will return between the two countries starting in November.
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However, if an agreement is reached, some temporary relief, such as limited tariff reductions, easing of technology export controls, and purchases of US soybeans, could be agreed upon at the Trump-Xi meeting next week.
This meeting in Kuala Lumpur could prove decisive for the future of US-China trade relations. If the talks are successful, a wave of relief will sweep through global markets, but if disagreements persist, the trade war could escalate further, significantly impacting the world economy.
