Trump and Xi Reach Trade Truce in South Korea Beans Chips and High Stakes Diplomacy

Donald Trump and Xi Jinping have once more reached a temporary settlement after a high-stakes summit in South Korea, halting further escalation in their ongoing trade war. The two leaders made significant concessions aimed at reducing immediate tensions, with details pointing to a strategic swap in key sectors—soya beans and microchips.

China announced it will resume purchases of American soya beans, breathing life back into a $12 billion export trade that had been abruptly frozen in May. The sudden halt had delivered a sharp blow to the US Midwest farming belt, a region that holds considerable weight in American elections. In response, China sourced beans from Brazil and Argentina, amplifying strains for both US agriculture and broader diplomatic alliances. Now, Treasury Secretary Scott Bessent has indicated China aims to buy 12 million metric tonnes by January, with Beijing later suggesting purchases could return to 25 million tonnes annually. Despite this apparent breakthrough, China’s supply lines remain deeply invested in South America, so a full return to prior US volumes will likely take time.

Trump heralded the restart of soya trade as a major victory, urging American farmers to expand their operations as he thanked President Xi publicly. The Chinese Commerce Ministry offered a more restrained appraisal, confirming only a consensus on broader agricultural trade.

The row over high-tech trade continues to shape the dynamic. Trump has offered to ease certain export controls on Nvidia’s microchips, which are indispensable for AI advancement. While some export restrictions remain, an agreement has been struck to pause new regulations for a year, with both sides pledging to study and refine their respective policies during this period. China remains anxious to reduce dependence on American semiconductors, aware that delays risk its progress in emerging technology sectors.

Rare earth minerals also entered the spotlight, with Xi agreeing to maintain open flows of these critical resources—a relief for US industries reliant on China’s global dominance in refined materials and magnets. Trump reciprocated by halving punitive tariffs introduced earlier, particularly those imposed in the context of curbing the fentanyl crisis, as China reportedly commits to tackling illicit flows into America.

Although the average US tariff on Chinese goods stands at 30 per cent—an elevated figure by global standards—China’s exports to the rest of the world are climbing, reinforcing its economic resilience. Despite a steep drop in shipments to the United States, broader exports surged by over 8 per cent in September, keeping China on course for its 5 per cent GDP growth target this year.

Both Washington and Beijing appear to recognise the limits of economic brinkmanship. Neither has managed to deliver a decisive blow, nor can they do so without grave self-inflicted damage. An era of annual negotiations now seems likely, replete with uncertainty and drama, yet underscored by a willingness to de-escalate when necessary. As the global economy becomes increasingly divided, other nations may well find themselves compelled to choose sides or risk being caught in the crossfire.