AUSTIN - It is the next episode of the nearly year-long US-China trade war saga, being staged in the land of the K-drama.
Will the
between presidents Donald Trump and Xi Jinping, scheduled to take place on Oct 30 in Busan, result in a thaw between the world’s largest economies?
Or will the trade war take a turn for the worse? There are no easy answers to those questions, because the plot in this live-wire drama is anything but formulaic.
It is full of twists and turns, and the dependable happy ending in the average Korean drama is not guaranteed.
Not in any doubt, however, is the instinct of US President Trump to create drama. The real estate mogul turned TV entertainer turned president, by his own account, is ever on the hunt for a deal. All his actions are guided by that imperative.
The latest evidence is his decision, announced on Oct 23 through his social media channel,
The provocation was an ad against US tariffs featuring the iconic Republican president Ronald Reagan, run by a Canadian state.
A sense of foreboding over the Busan meeting is par for the course, but given Mr Trump’s calibrated approach to China, replete with declamations of admiration and respect for President Xi, the summit should at least begin cordially.
The atmosphere will at least partly be owing to the preparatory bilateral meetings under way in Kuala Lumpur, led by US Treasury Secretary Scott Bessent and Chinese Vice-Premier He Lifeng. If the teams close well, the presidents will open the Busan meeting well.
For all his tactical unpredictability,
His threat to stack on 100 per cent tariffs on Chinese goods from Nov 1, on top of the 57 per cent that apply now, does not seem to have rattled Mr Xi.
Instead, it was China that seemed to have blindsided him on Oct 9 with expansive curbs that could limit American access to vital rare-earth minerals, which are indispensable to the modern economy, used in everything from smartphones to missiles. China’s rare-earth curbs kick in on Dec 1.
But that’s not all. The 90-day trade truce between the US and China that was announced in August – to hold in abeyance their tit-for-tat planned triple-digit tariffs while they negotiated further – is set to expire on Nov 10.
Most analysts believe the dynamic between the superpowers has dramatically altered since Mr Trump began imposing high tariffs and China responded blow for blow.
Unlike the negotiations between China and the US during Mr Trump’s first term, China is being extremely assertive this time around, said Ms Wendy Cutler, a former US deputy trade representative.
“For any concession that Beijing makes to Washington, it is extremely clear that they’re gonna expect something in return. And that’s where this discussion is gonna get somewhat tense,” Ms Cutler, now a senior vice-president at the Asia Society Policy Institute, said
Beijing recognises that the last time the President actually put in place tariffs of that magnitude, he had to quickly back down, she said.
“Not because of China, but because of his own domestic economic pressures,” Ms Cutler said, referring to the fall in bond and stock markets.
“And this time around, it’s even more risky. There are so many high tariffs in place now between the US and other trading partners,” she added.
What they need is a reset, said Mr Bryan DeAngelis, partner at Washington-based Penta Global, a consultancy providing strategic advisory services for large enterprises, institutions and public sector clients.
“For the US, it’s about getting China to purchase more US exports, particularly soya beans, and easing restrictions on rare-earth minerals; for China, pushing Trump to ease up on tariff threats and export controls on high-end computing chips.”
Both sides will likely delay the implementation of their threats and keep talking, said Ms Cutler. “I’ll be looking very closely to see if the two leaders announce a visit by the President to China, which could then become the next action-forcing event for actual deliverables.”
Mr David Meale, head of China practice at the New York-based Eurasia Group, said he would define success as both nations agreeing not to impose tariffs from Nov 1.
“Scheduling the Bessent-He meeting this weekend shows me both sides are serious about sorting out minerals and technology export controls, in order to pave the way for a positive leaders’ meeting next week.
“My recent travel in China convinces me that the Chinese side strongly prefers the two countries find a path between their pain points – but that they are ready to be combative if that fails,” Mr Meale said.
Both sides need this summit to be a success, said Penta Global’s Mr DeAngelis. “Trump and Xi are facing pressure in their own countries to come out of the summit showing progress – or the perception that they have the upper hand,” he said.
“Given the political pressures and the number of issues at hand, however, I am sceptical that we will get lasting success from this summit.”
The task before the two leaders, who are meeting for the first time since Mr Trump came back to power, is daunting. For the summit to be called a success, they will need to say yes to at least some of these eight key questions:
Will the ticking tariff bombs be defused?
The first is to defuse Mr Trump’s threat to impose 100 per cent tariffs, on top of existing duties of around 57 per cent, on Chinese goods from Nov 1.
This was his response to China’s decision to curb exports of crucial rare-earth magnets and minerals from Dec 1, the second bomb.
If both of these are neutralised, the two men can turn their attention to the third explosive – the end of their tariff truce, which is set to expire on Nov 8.
Will China buy US soya beans?
Once the largest importer of American farm goods, including soya beans, Beijing paused purchases of the product in May as Mr Trump ratcheted up tariffs on China. “We are smack-dab in the middle of the harvest season for US soya beans. If we don’t sell soya beans soon, there will be enormous losses and lots of bankruptcies in the US agricultural industry,” said Mr Phil Luck at a briefing previewing Mr Trump’s Asia trip at the Centre for Strategic and International Studies think-tank.
The ability to hurt American farmers, an important political constituency, is a key card in China’s hands. It may also choose to end a waiver of tariffs on US farm imports that is set to expire on Nov 1.
Will TikTok and tech deals be on the cards?
Mr Trump would like American control over the popular video-sharing app, which won him support from younger voters in the 2024 presidential election.
China has not formally or publicly approved
, although Mr Trump claimed that the Chinese President had endorsed it. Though Chinese state media and officials have been silent, indicating tacit acceptance, final regulatory approval from Beijing is still pending. China can still create barriers over the export of the social media app’s closely guarded algorithm.
On its part, China will want the US to ease restrictions on the export of advanced technologies, including semiconductors, software and artificial intelligence. But the US is instead said to be considering broader software export restrictions covering items from laptop chips to jet engine software, and looking at coordinating these controls with its allies.
Will fentanyl exports from China be curbed?
China is a major source of the precursor chemicals that are fuelling the deadly fentanyl crisis in the US. Mr Trump, who has put a 20 per cent tariff on all Chinese goods demanding action on the synthetic opioid, has said fentanyl would be his “first question” for Mr Xi.
What will Trump say on Taiwan?
China is likely to demand that the US actively oppose Taiwan independence and stop arms sales to the self-ruled island, which Beijing maintains is part of its territory.
Mr Trump, who has diluted diplomatic engagement with the island since the start of his second term, has declined to answer Taiwan-related questions from the media.
Will Trump push China to end support to Russia?
Mr Trump has said he will push Mr Xi to stop Chinese companies from purchasing Russian oil, after imposing sanctions on Moscow on Oct 22 to try to end the Ukraine war.
But it is not clear if he will also press China to stop restocking Russia’s defence industrial base – and go to the extent of threatening sanctions on Chinese institutions supporting Russia.
Will the US let China foreign direct investment in?
The European Union has pledged US$600 billion (S$779 billion); Japan US$550 billion; and South Korea US$350 billion. Will China top it all and make an offer that Mr Trump simply can’t refuse? Chinese negotiators have purportedly dangled the prospect of a massive investment package to the tune of US$1 trillion in return for lower tariffs.
While Mr Trump may be keen, hawks in his administration are opposed to the idea of letting China own factories and farmland in the US.
Will they let the people engage?
Mistrust between the two sides is high, and engagement between their people remains fraught. Eight in 10 Americans have an unfavourable view of China, polls show. Some 42 per cent see it as an enemy and 52 per cent identify it as a competitor. Only 6 per cent see it as a partner.
Fewer than 1,000 Americans study in China now, a drop from 20,000 in the 2010s. To Chinese students in the US, Mr Trump has sent mixed signals. He threatened to revoke their visas but also promised to issue 600,000 visas. Will the leaders attempt to clear the air?
Even if Mr Trump declares the Oct 30 summit a success, his administration has still not articulated how it envisages developing its relationship with China beyond tariffs and tech controls. Their foreign and defence ministers are yet to meet. This probably means the love-hate drama will continue on to the next season.
