What To Expect From Thursday’s US-China Trade Talks

Upcoming talks between President Donald Trump and Chinese president Xi Jinping could defuse several major economic flashpoints in the trade war between the two countries.

The leaders of the world’s two largest economies are expected to meet Thursday in South Korea to negotiate several disputed issues that have threatened both countries in recent months. The leaders will hammer out details of an agreement on tariffs, soybeans, rare earth minerals, and fentanyl, Treasury Secretary Scott Bessent said in television interviews this weekend, following his own meetings with his Chinese counterpart.

Superpowers At Odds

“I believe that we have the framework for the two leaders to have a very productive meeting for both sides,” Bessent said on Meet The Press Sunday. “And I think it will be fantastic for U.S. citizens, for U.S. farmers, and for our country in general.”

Should the negotiations play out as Bessent indicated, they would alleviate several economic threats that have emerged in recent months as the U.S. and China have imposed tit-for-tat trade measures against one another. Stocks rose Monday on optimism that the recent trade wars would de-escalate.

Trade tensions had seriously escalated earlier this month after Chinese officials said they would restrict exports of rare earth minerals, which are used by high-tech industries all over the world, including the U.S. The minerals are necessary to make batteries, computer chips, and weapons among other products. Trump retaliated by threatening to impose triple-digit tariffs on China, on top of already high import taxes, potentially driving up costs for U.S. consumers and causing shortages of consumer products.

At Issue: Rare Earths, Soybeans And Fentanyl

The extra tariffs are now likely “off the table,” Bessent said on Face The Nation. He also said he expects China to issue “some kind of deferral” on its rare earth export controls.

In another sign of progress, Scott said China would likely resume buying soybeans from the U.S., potentially reinstating the number one customer for U.S. soy farmers after China halted all purchases earlier this year. China may also take action to reduce fentanyl smuggling to the U.S., which could pave the way for Trump to remove the 20% tariff he had imposed to crack down on the flow of illicit drugs.

Overall, the talks could help cool the on-again, off-again trade war between the U.S. and China that flared up this year as Trump has sought to remake U.S. trade policy. However, some experts said the talks were unlikely to settle underlying differences that drive the conflict, including the American trade deficit with China that Trump has frequently criticized, and American reliance on rare earths from China, which dominates the market for the critical materials.

“Negotiations this fall will likely yield a tenuous agreement,” Dan Alamariu, chief geopolitical strategist at Alpine Macro, wrote in a commentary last week. “The recurring cycle of tension-truce-tension will persist as both powers are likely to push against each other, but still remain too economically intertwined to risk a full rupture.”