Trump–Xi summit: Framework for peace or pause before the next storm?

The start of President Donald Trump's consequential week of Asian diplomacy was marked by an unexpectedly joyful scene. 

Upon landing in Malaysia — the first leg of his tour — the US president was greeted at the airport by Malaysian officials and a vibrant crowd of onlookers. These well-wishers met the president, waving flags and dancing, ahead of a summit with leaders from the ASEAN group of nations. 

This colourful welcome preceded a weekend of intense negotiations between US and China that raised global hopes for an end to the protracted trade conflict between the world's two largest economies.

All eyes are now fixed on South Korea, where President Trump and Chinese President Xi Jinping are slated to hold their landmark face-to-face meeting on Thursday. 

The talks will take place on the sidelines of the APEC summit in Gyeongju, marking the first time the two leaders have met since 2019, following President Trump's return to the White House and a subsequent radical shift in global trade policies.

A substantial framework emerges from Kuala Lumpur

Even before the two leaders convene, significant progress has been achieved. 

US and Chinese officials, having wrapped up a weekend of negotiations on the sidelines of the ASEAN summit in Kuala Lumpur, have confirmed a breakthrough. 

US Treasury Secretary Scott Bessent announced that the two sides agreed on the framework of a potential trade deal. Bessent described this as a "substantial framework for the two leaders" to discuss in South Korea.

The positive momentum was reciprocated by Beijing. Chinese Vice Premier He Lifeng, the nation's top trade negotiator, stated that the sides had reached "a basic consensus on arrangements to address each side's concerns". 

Li Chenggang, also a top Chinese negotiator, confirmed a "preliminary consensus" following "very intense consultations". Both nations have committed to "further finalise specific details" and proceed with their respective domestic approval processes. Following the announcement, President Trump expressed optimism, declaring, "I think we're going to have a deal with China."

This constructive movement sent positive tremors through global markets, with Asian stock markets surging on Monday in response to the hope of easing tensions. Japan's Nikkei 225 and South Korea's KOSPI both hit record highs, while Hong Kong's Hang Seng also saw strong gains.

Averting the 100% tariff threat

A primary outcome of the framework is the anticipation of avoiding massive tariff escalation. Bessent confirmed he does not expect the 100% tariff on Chinese goods threatened by Trump to come into force. 

This aggressive tariff threat was initially set to commence on 1 November and was imposed in retaliation for China tightening restrictions on the export of rare earth minerals. 

The successful establishment of this framework significantly reduces the chance of an all-out global trade war, a scenario which had threatened catastrophic damage across economies, including European and UK car production.

The price of access: Rare earths and agriculture

The framework specifically addresses the key elements that fuelled the recent escalation: rare earth minerals and agricultural trade.

China had heightened tensions earlier in October by announcing proposed rules — set to take effect 1 December — that would require companies worldwide to acquire a licence to export rare-earth magnets and specific semiconductor materials. 

Li Chenggang, also a top Chinese negotiator, confirmed a "preliminary consensus" following "very intense consultations". Both nations have committed to "further finalise specific details" and proceed with their respective domestic approval processes. Following the announcement, President Trump expressed optimism, declaring, "I think we're going to have a deal with China."

Rare earths are a group of 17 critical minerals, including cerium, holmium, and dysprosium, vital for the manufacture of countless high-tech products, such as smartphones, electric cars, and fighter jets. Beijing controls approximately 90% of the world's rare earth processing and 60% of global production. 

In response to China's leverage play, which he saw as trying to hold the world "captive", Trump threatened the steep 100% tariff.

Crucially, the framework includes a deferral on China's restrictive rare earth mineral controls. China has agreed to "delay that for a year while they re-examine it". US trade representative Jamieson Greer noted the hope that the deal provides "a path forward where we can have more access to rare earths from China".

On the agricultural front, China — the world's biggest buyer of soybeans — had halted all orders as the trade war heated up, severely impacting US farmers. As part of the new deal, China will resume substantial purchases of US soybeans. 

Bessent, noting he is also a soybean farmer, reassured reporters that American soybean farmers "will feel very good about what's going on both for this season and the coming seasons for several years" once the terms are public.

Consummating the TikTok transaction

Beyond raw materials and crops, the framework agreement also incorporates a resolution for the video-sharing platform, TikTok. Bessent confirmed that a "final deal" on TikTok's US operations has been agreed upon. 

The US has long pressed to separate the app's US arm from its Chinese parent company, ByteDance, due to national security concerns. 

While the framework is set, Trump and Xi are left to "consummate that transaction on Thursday". The previously discussed structure involved US companies controlling the app's algorithm and Americans holding six of the seven board seats for its US operations.

As President Trump continues his week-long Asian tour — which also involves announcing trade deals with Malaysia, Cambodia, Thailand, and Vietnam — the global focus remains firmly set on South Korea, where the leaders of the world's two largest economies are poised to cement a framework designed to halt the spiralling trade conflict.