Trump-Xi summit in South Korea yields major breakthrough on tariffs and trade framework

KATHMANDU: In a highly anticipated summit in the port city of Busan on Thursday, Donald Trump and Xi Jinping met for the first time since Trump returned to the White House, marking a significant shift in U.S.–China relations. The meeting came amid mounting global economic pressure and strategic rivalry between the world’s two largest economies.

Major Breakthroughs

Trump announced a cut in U.S. tariffs on Chinese imports from about 57% to 47%, following discussions with Xi.

Xi committed to delaying new export restrictions on rare earth minerals by one year, providing relief to U.S. and global technology supply chains.

In exchange, China agreed to purchase “tremendous amounts” of U.S. soybeans, signalling a return to major agricultural trade flows.

The two leaders also set up a framework agreement on trade and technology issues, averting the pending U.S. plan to impose 100% tariffs on Chinese goods starting 1 November.

Strategic Implications

The summit marks a pivot in the U.S.–China relationship:

Both sides appear willing to “manage differences responsibly,” rather than escalate into full-blown economic war. Markets reacted positively in advance of the talks.

The tariff reduction and rare‐earth delay give breathing space to tech, defence and manufacturing sectors in both economies — especially relevant to global supply chains and technology competition.

For Trump, this meeting restores a major diplomatic agenda item and signals commitment to stabilising economic relations with China — which may ease pressure on global trade and investment flows.

For Xi, the meeting helps reposition China as a key construction partner in trade, while reducing immediate threats to its export controls and tech autonomy.

Still Unresolved Issues

Despite the breakthroughs, major structural issues remain:

Control of advanced semiconductor exports and Chinese access to U.S. tech markets were not fully resolved in the summit.

The specific details of how much China will buy in U.S. agricultural goods, and the timing of those purchases, were not disclosed.

The broader geopolitical issues — Taiwan, South China Sea, military deployments — were touched on lightly, but no firm commitments emerged. Analysts say this remains an “early warming,” not a full reset.

Markets remain cautious: while relief is being welcomed, investors recognise that new tensions could still flare if sincerity or implementation falters.

Why It Matters for Nepal and Global Business

As global supply chains adjust, countries like Nepal stand to be affected indirectly through shifts in regional manufacturing patterns, commodity flows (e.g., rare earths) and investment.

For international investors and business watchers, this summit might signal a de-escalation in one of the major cross-border economic conflicts, which could improve confidence, lower risk premiums, and unlock new opportunities in Asia.

From an economic lens, the reduction in tariffs and the trade framework may ease inflationary pressure, reduce trade disruption, and open up more stable access to consumers and producers in China and the U.S.