Key Takeways
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Meeting Overview: On October 30, Presidents Xi Jinping and Donald Trump met at the APEC summit in South Korea for the first time since 2019, reaching a tactical agreement that allows the U.S. to diversify rare earth supplies while China manages deflation pressures and seeks tech self-reliance.
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Key Concessions: The agreement includes reduced tariffs; the U.S. will lower the duty on fentanyl imports and extend tariff suspensions until November 2026. China may remove some duties on U.S. agricultural goods. Both countries also agreed to suspend reciprocal port charges for one year.
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Economic Impact: While the deal offers temporary trade relief, it doesn’t resolve ongoing disputes over semiconductors and rare earths. Economic growth in China is expected to improve slightly, yet overall reliance on U.S. imports remains high amidst persistent geopolitical tensions.
On 30 October, Presidents Xi Jinping and Donald Trump met for the first time since 2019, on the sidelines of the APEC summit in South Korea. The two powers reached a tactical agreement allowing the United States to gain time to diversify its sources of rare earth supplies and China to manage deflationary pressures and pursue technological self-reliance.
The concessions announced as part of this agreement may offer some respite to global trade businesses. However, the agreement remains fragile: several major disputes remain, particularly over semiconductors and rare earths, and each party retains leverage that could reignite trade hostilities.
Key points of the agreement reached during discussions in Kuala Lumpur
On Tariffs
The United States agreed to reduce customs duties on fentanyl1 from 20% to 10%, lowering the overall tariff rate on Chinese imports from 41% to 31%. Additionally, the suspension of reciprocal customs duties of 24% will be extended until 10 November 2026. On the Chinese side, there is a possible removal of 10–15% customs duties on U.S. agricultural products.
On export controls
The United States will suspend for one year the 50% subsidiary2 rule for export controls. China, in turn, will postpone for one year the planned controls on five additional rare earths and the application of extraterritorial3 regulations.
In terms of official visits
President Trump will visit China next April, while President Xi Jinping will visit the United States at a later date.
On agriculture
China commits to increasing its purchases of American soybeans, livestock, and vegetables, as outlined in the White House memo.
Port charges
Finally, both countries agreed on a one-year pause on reciprocal port charges.
Macroeconomics: a truce that slows decoupling without stopping it
The agreement temporarily reduces certain tariffs and avoids further export control measures, which should provide moderate support for bilateral trade. For China, this translates into a slight improvement in growth prospects (+0.2 points compared to our previous forecasts to 4.4% in 2026), thanks to a potential recovery in direct exports to the United States and a slowdown in tariff-driven offshoring. The effect will remain limited: the trend towards diversification of supply chains continues, and exposed sectors (electronics, pharmaceuticals) remain sensitive to the risk of future increases in customs barriers.
This truce therefore does not fundamentally change the situation: US dependence on Chinese imports remains high, and geopolitical tensions (Taiwan, technology war, etc.) continue to weigh on business planning.
Contrasting repercussions depending on the sector
Technology and semiconductors
The suspension of new US restrictions on critical software provides some breathing space for China’s pursuit of technological self-reliance. However, the lack of US concessions on advanced chips will keep the bottlenecks for Chinese manufacturers, while US companies remain exposed to anti-dumping measures in China on analogue chips.
Rare earths and strategic industries
The postponement of Chinese controls on five additional rare earth elements has secured US firms another year…
