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Post-Xi-Trump Summit Developments and Impact: Trade Truce and Future Outlook

After the Xi-Trump meeting held in Busan, South Korea, at the end of October 2025, China and the United States announced a one-year truce in economic and trade relations. The U.S. reduced the additional tariffs on Chinese goods from 57% to 47%, and cut the 10% fentanyl tariff imposed on China, Hong Kong, and Macau down to 10%. The U.S. also extended certain Section 301 tariff exclusions and suspended high-tech export controls for one year. In return, China suspended its planned new export restrictions on rare earths for one year and resumed the purchase of U.S. soybeans, revitalizing bilateral trade. These measures indicate a partial easing of U.S.-China trade tensions, though tariffs remain at elevated levels and have not returned to pre-dispute rates. This reflects both sides’ intention to avoid a full-scale confrontation while adjusting strategies through the fourth quarter of 2025. The outcomes of the Xi-Trump meeting were largely driven by both countries' need to stabilize relations amid economic and geopolitical pressures. The U.S., aiming to reduce domestic economic uncertainty and supply chain disruptions, made limited concessions on tariffs and export controls. China, on the other hand, sought to strengthen export competitiveness and stabilize its domestic supply chains by resuming agricultural imports and extending the rare earth export suspension. The Taiwan issue was notably left untouched, indicating a temporary focus on economic cooperation and de-escalation. However, the underlying structural tensions between the two countries remain unresolved. In the short term, the trade truce signaled by the Xi-Trump summit is expected to ease market concerns and slow tariff escalation, creating room for gradual recovery in bilateral trade. Yet, the long-term outlook for U.S.-China economic relations depends on the implementation of subsequent agreements and further strategic adjustments. Looking ahead to 2026, any escalation in Beijing’s stance toward Taiwan could renew bilateral tensions. Over the medium to long term, markets will need to monitor competition in technology and resource controls, as well as the potential for renewed trade frictions under shifting global economic conditions.