Trump, Xi talks offer hopes for US-China trade thaw

Highlights:

• Both sides escalated trade threats for leverage ahead of talks
• Trump says could sign deal as he meets Xi in Busan
• Fentanyl issue is a key topic for Trump in talks
• Taiwan tensions loom over US-China discussions
• Reuters Live: Trump and Xi meet in South Korea

US President Donald Trump held talks with China's Xi Jinping at a South Korean air base on Thursday, with both leaders sounding optimistic about cooling trade tensions between the world's two largest economies.

The talks in the southern port city of Busan, their first face-to-face meeting since 2019, marked the finale of Trump's whirlwind Asia trip on which he also touted trade breakthroughs with South Korea, Japan and Southeast Asian nations.

"We are going to have a very successful meeting, I have no doubt. But he is a very tough negotiator," Trump said as he shook hands with Xi, who showed little emotion as Trump told reporters the pair might sign a trade deal on Thursday.

As they sat down with their delegations to begin talks, Xi told Trump via a translator it was normal for the two leading economies of the world to have frictions now and then.

A few days ago, trade negotiators for both countries reached a "fundamental consensus on addressing each other's primary concerns", Xi said. "I am willing to continue working with President Trump to lay a solid foundation for China-US relations," he added.

The meeting, taking place on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit, lasted nearly two hours. Trump shook hands and escorted Xi to his car before the US president was given a red carpet send off at the airport.

Neither side has yet released further details of the talks.

Chinese stocks climbed to a decade high and the yuan currency to a near one-year peak against the dollar as investors hoped for an easing of trade tensions that have upended supply chains and rocked global business confidence.

World stock markets from Wall Street to Tokyo have hit record highs in recent days.

Trump has repeatedly talked up the prospect of reaching agreement in his meeting with Xi, since negotiators from both sides appeared to reach an understanding in Kuala Lumpur on Sunday.

But with both countries increasingly willing to play hardball over areas of economic and geopolitical competition, many questions remain about how long any trade detente may last.

The trade war reignited this month after Beijing proposed dramatically expanding curbs on exports of rare-earth minerals vital for high-tech applications, a sector China dominates.

Trump vowed to retaliate with additional 100% tariffs on Chinese exports, and with other steps including potential curbs on exports to China made with US software - moves that could have upended the global economy.

"THE G2 WILL BE CONVENING SHORTLY," Trump posted on Truth Social shortly before meeting Xi.

In a separate post, he said the US would step-up testing of nuclear weapons immediately, noting China's growing arsenal. Trump declined to respond to a reporter's question on the post at Thursday's meeting.

US EXPECTS BEIJING TO DELAY RARE EARTH CONTROLS

After a weekend scramble between top trade negotiators, US Treasury Secretary Scott Bessent said he expected Beijing to delay the rare earth controls for a year and revive purchases of US soybeans critical to American farmers, as part of a "substantial framework" to be agreed by the leaders.

Ahead of the summit, China bought its first cargoes of US soybeans in several months, Reuters reported exclusively on Wednesday.

The White House has signaled it hopes the summit will be the first of several between Trump and Xi in the coming year, including possible leader visits to each country, indicating a protracted negotiation process.

But Trump wants some quick progress, in talks being closely watched by businesses worldwide.

Trump said on Wednesday he expects to reduce US tariffs on Chinese goods in exchange for Beijing's commitment to curb the flow of precursor chemicals to make fentanyl, a deadly synthetic opioid that is the leading cause of American overdose deaths.

Trump has also said he might sign a final deal with Xi on TikTok, the social media app that faces a US ban unless its Chinese owners divest its US operations.

PRIOR DEALS ON TARIFFS AND RARE EARTHS DUE TO EXPIRE

Previous deals, which brought down retaliatory tariffs sharply to about 55% on the US side and 10% on the Chinese side and restarted the flow of rare earth magnets from China, are due to expire on November 10.

Bessent said China had agreed to help curb the flow of fentanyl precursors, but did not say whether the US had made any concessions in return.

Beijing has sought the lifting of 20% tariffs over fentanyl, an easing of export controls on sensitive US technology, and a rollback of new US port fees on Chinese vessels aimed at combating China's global dominance in shipbuilding, ocean freight and logistics.

Trump's meeting with Xi comes at the end of a five-day trip to Asia in which he signed pacts with Japan and Southeast Asian nations on rare earths, seeking to blunt China's stranglehold on minerals used in everything from cars to fighter jets.

TENSIONS OVER TAIWAN

Regional strategic tensions, particularly over Beijing-claimed Taiwan, a US partner and high-tech powerhouse, are an ominous backdrop to the summit.

On Sunday, Chinese state media said Chinese H-6K bombers recently flew near Taiwan to practise "confrontation drills."

US Secretary of State Marco Rubio said Taiwan should not be concerned about the US-China talks, despite some experts expressing fears that Trump might offer concessions over the island. Washington is required under US law to provide Taiwan with the means to defend itself.