Trump and Xi Strike Trade Wins in South Korea as Bigger Fights Loom

What Happened

President Trump and Chinese President Xi Jinping met face-to-face for nearly two hours in Busan, South Korea. This was their first direct talks since Trump returned to the White House. Trump called the meeting a ‘12 out of 10’ and said they reached an understanding on several major issues.

Among the outcomes, China agreed to pause export restrictions on rare earth minerals for one year. These materials are critical for defense systems, electronics, and clean energy technologies. China has long held leverage in these sectors due to its dominance in global supply chains.

The two leaders also agreed on trade measures. The United States will reduce a key tariff on certain Chinese goods from 20% to 10%. In exchange, China pledged stronger enforcement against fentanyl precursors being exported into the U.S., which is a major factor in the ongoing drug crisis.

In a significant win for U.S. agriculture, China committed to purchasing 12 million metric tons of American soybeans this season. They also pledged 25 million tons annually for the next three years. Trump said he plans to visit China in April 2026, with Xi set to make a reciprocal trip to the U.S. sometime after.

Notably, Taiwan was not mentioned during the meeting. No new agreements were reached regarding oil or natural gas exports. Trump did hint at a potential future deal involving Alaskan energy, although nothing formal was announced.

Why It Matters

This summit was more about leverage than diplomacy. Both leaders came in with domestic pressure and geopolitical baggage. What emerged was a calculated cooling-off, not a reset.

The rare earth pause gives the U.S. time to reinforce its own supply chains. This is an urgent priority given China’s strategic edge in those materials. One year of breathing room does not solve the underlying dependency. However, it delays disruption and opens the door for parallel sourcing.

The fentanyl deal carries political weight, especially in light of how the opioid crisis has shaped voter concerns and law enforcement priorities. If China follows through on clamping down on the flow of precursor chemicals, it will represent a rare cooperative gesture on an issue where blame has been shared and avoided.

The soybean deal is a more immediate win for farmers. Agricultural exports have suffered during past trade disputes. This multi-year purchase commitment provides a level of stability the sector has not seen in years.

Still, many of the core issues remain untouched. There was no movement on Taiwan, no permanent tariff framework, and no binding rules around industrial competition. What the meeting accomplished was temporary relief and the beginning of a framework on which more could be built.

How It Affects You

Prices on some imported goods may decrease slightly as tariffs ease. This is particularly true in categories that heavily rely on Chinese manufacturing. That includes electronics, tools, household goods, and select raw materials.

For American farmers, especially those tied to soybean production and export infrastructure, this deal offers some relief. With new commitments from China locked in for three years, there is reason for optimism heading into the next planting season.

For those watching national security and supply chain policy, the pause in rare earth production indicates urgency, not resolution. The U.S. still lacks a domestic alternative for many of these materials. The one-year deal is a countdown, not a cure. Businesses tied to critical manufacturing may find this period useful for diversifying their sourcing and strengthening contracts.

The Trump-Xi summit did not end the competition between the two countries, but it lowered the temperature. Instead of direct confrontation, both sides leaned into controlled tension. It remains to be seen whether that approach will last beyond the current phase, but for now, markets have a little more room to breathe.