Key Highlights
- Top US and Chinese economic officials are holding emergency talks in Malaysia to de-escalate a rapidly intensifying trade dispute.
- The discussions aim to prevent a new wave of 100% US tariffs and crippling Chinese restrictions on rare earth minerals.
- The primary goal is to salvage a crucial upcoming meeting between Presidents Donald Trump and Xi Jinping, with global economic stability hanging in the balance.
- Experts warn that failure to secure a deal could lead to a much “nastier” and more damaging economic conflict.
High-Stakes Negotiations to Avert Economic Chaos
Top economic officials from the United States and China convened in Kuala Lumpur, Malaysia, for high-stakes negotiations aimed at pulling the world’s two largest economies back from the brink of an all-out trade war. A U.S. Treasury spokesperson described the first day of talks as “very constructive,” though the atmosphere remains tense as both sides look to salvage a planned meeting between President Donald Trump and Chinese President Xi Jinping.
The urgent discussions, held on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit, are a last-ditch effort to chart a path forward after a fragile trade truce was shattered by new threats from both nations.
The Brink of Escalation
The delicate balance achieved in previous meetings was upended when President Trump threatened to impose 100% tariffs on Chinese goods starting November 1. This move was a direct retaliation for China’s decision to vastly expand its export controls on rare earth magnets and minerals—a critical component in many high-tech and military applications.
Compounding the tensions, the U.S. recently broadened its export blacklist, effectively cutting off thousands more Chinese firms from American technology. This tit-for-tat exchange has disrupted global supply chains and risks a return to the triple-digit tariffs seen at the height of the trade war. The Chinese delegation, led by Vice Premier He Lifeng, has made no public comments on the negotiations.
Trump’s Agenda and APEC Summit Hopes
These talks are critical groundwork for a planned meeting between Trump and Xi at the upcoming Asia-Pacific Economic Cooperation (APEC) summit in South Korea. Before departing for his Asia tour, Trump outlined several key topics for his discussion with Xi, including relief for American farmers hit by China’s freeze on U.S. soybean purchases and the status of Taiwan.
He also flagged the case of jailed Hong Kong media tycoon Jimmy Lai, a high-profile symbol of China’s crackdown on freedoms in the city. “We have a lot to talk about with President Xi, and he has a lot to talk about with us. I think we’ll have a good meeting,” Trump stated before leaving Washington.
Expert Analysis: A Delicate Balance
Analysts watching the talks emphasize the precariousness of the situation. Josh Lipsky of the Atlantic Council noted that mitigating the dispute over U.S. tech curbs and China’s rare earths controls is paramount. “I’m not sure the Chinese can agree to that. It’s the primary leverage that they have,” Lipsky said.
Scott Kennedy, a China expert at the Center for Strategic and International Studies, warned of the severe consequences of failure. “If they make a deal, their gambit will have paid off,” he said. “If there’s no deal, then everyone will need to prepare for things to get much nastier.”
The “Rare Earths Stranglehold”
The conflict is a renewal of a bitter dispute that had been temporarily paused by a 90-day truce. That agreement, brokered by U.S. Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and Chinese Vice Premier He Lifeng, was due to expire on November 10.
However, after the U.S. expanded its export blacklist in late September, China retaliated with the new rare earth controls on October 10, aiming to prevent their use in military systems. The Trump administration has since added further pressure, announcing a new tariff probe into China’s “apparent failure” to meet the terms of the 2020 “Phase One” trade deal, ensuring the talks in Malaysia carry the full weight of global economic expectations.
Image Referance: https://www.reuters.com/world/china/us-china-seek-avoid-trade-war-escalation-salvage-trump-xi-meeting-malaysia-talks-2025-10-25/