As the leaders of the world’s two largest economies prepare to meet later this week, U.S. President Donald Trump expressed optimism that a significant agreement with China is within reach. On the sidelines of the Asia‑Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea, Trump told business executives:
“I think we’re going to have a deal. I think it will be a good deal for both, and that’s really a great result.” KPBS Public Media+2wunc.org+2
He added:
“That’s better than fighting and going through all sorts of problems—and, you know, no reason for it.” weku.org
The meeting — slated for Thursday in Busan, South Korea — between Trump and Xi Jinping has been generating intense attention not only for its trade implications but also for its strategic overtones. Reuters+1
What’s on the table
According to sources and recent signals, the deal under discussion would involve several major components:
- Tariff adjustments: Trump has signalled a possible reduction in U.S. tariffs on Chinese goods in exchange for Chinese cooperation in other areas, such as restricting the export of chemicals used in fentanyl production. wunc.org+1
- Rare earths & mineral exports: China agreed to hold off imposing new export controls on rare earths, which are vital for electronics and defence supply chains. The Financial Express+1
- Procurement of U.S. agricultural goods: Beijing’s state-owned company (COFCO) reportedly purchased three U.S. soybean cargoes — the first of the year — apparently ahead of the summit as a goodwill gesture. Reuters
- Broader strategic cooperation: Discussions may also include non‐trade issues such as narcotics controls (fentanyl) and possibly elements of arms or tech controls, though these are less clearly defined. South China Morning Post+1
Why this matters
- Trade war de-escalation: The revived prospects of a deal could ease longstanding U.S.–China tensions that have weighed on global markets, supply chains and investor sentiment. Reuters+1
- Supply-chain security: Rare earth minerals and other critical inputs have become strategic chokepoints. A deal that keeps exports open could benefit U.S. manufacturers and allied economies. KPBS Public Media
- Political messaging: For Trump, achieving a deal with China represents a major foreign-policy win ahead of the 2028 election cycle, reinforcing his “deal-maker” brand.
- Regional geopolitics: The meeting comes at a moment when U.S. relations with Japan, South Korea and Taiwan are also in flux. A “good deal” could bolster U.S. standing in Asia and shape Beijing’s interactions elsewhere. Reuters
Challenges & unresolved issues
Despite the optimistic tone, key hurdles remain:
- Trust and verification: China has historically moved cautiously, and many of the proposed commitments (soybean purchases, export curbs) require monitoring and enforcement mechanisms.
- Scope of tariff relief: Although Trump hinted at lowering tariffs, Washington has yet to provide specifics on how much or how fast. Meanwhile, China had threatened valuable export restrictions, giving Beijing leverage. reutersconnect.com
- Strategic flashpoints: Some of the most difficult issues — such as Taiwan, military competition and tech export controls — are unlikely to be fully resolved in this summit. Indeed, Taiwan officials have signalled they do not expect abandonment but also remain cautious. Reuters
- Domestic political constraints: Any major concessions by the U.S. risk backlash from Congress or interest groups. The same applies in China, where domestic stability and control of key sectors are priorities.
What to watch after the meeting
- Statement of intent: Will Trump and Xi issue a joint communique or sign a formal pact? Or will they limit themselves to a framework agreement?
- Implementation signals: Look for announcements on Chinese soybean purchases, rare-earth export policies, and U.S. tariff modifications in the days following the summit.
- Market reaction: Investors will closely monitor how markets respond—tariffs removed, supply-chain risks eased, or new uncertainties emerging.
- Follow-on diplomacy: The meeting could shape U.S.–Japan ties (rare earths deal), U.S.–South Korea alliances (as evidenced by Trump’s Korea visit) and regional security architecture in the Indo-Pacific. Reuters+1