Press reports suggest that the US and China are closer to agreeing on a trade deal on rare earths, fentanyl, and agricultural products over the next few weeks, as China’s President Xi Jinping and US President Donald Trump meet in South Korea this week for the APEC meeting in Gyeongju. The two sides are likely to agree on a renewal of the rolling three-month truce on tariffs in order to allow negotiations to conclude positively.

This renewed phase of tension between the two major global super powers started with Trump’s “Liberation Day’s” tariffs, which quickly led to an escalation in the trade war, at the end of which the US imposed a 145% tariff on China’s exports and China retaliated with a 125% tariff. The two sides agreed on a truce after a brief meeting in Geneva in mid-May. As we discussed in our recent column, tensions escalated again when China decided to impose export restrictions for its rare earths, which would impede the production of key components of some of the most critical defence systems of the US military.

How likely is it that an agreement will ultimately be reached between two sides? From a narrow trade perspective, the United States and China continue to disagree on a number of significant trade issues, despite ongoing negotiations. Besides the reciprocal tariffs and the rare earths restrictions there are disagreements over intellectual property rights, forced technology transfer, and market access for agricultural products. Both countries are also at odds regarding regulatory barriers and state subsidies that affect competition and fair trade.

More importantly, the trade dispute is part of a much wider geopolitical conflict, which we labelled Cold War 2, encompassing the disruption of global supply chains and a tech conflict with many dimensions, including AI, big data, standard and quantum chips, cyberwarfare, and even digital currencies, with China championing the state-backed approach of Central Bank Digital Currencies (CBDCs, via its e-CNY) and the US having just launched its counter-offensive via the private-sector solution offered by USD-denominated stablecoins.

Additionally, part of the geopolitical dimension involves some critical territorial disputes. China is aiming at reincorporating Taiwan, which the US is supporting and which leads in  semi-conductor production. At the same time, the US is asking China help resolving the Russia-Ukraine conflict, after the Chinese foreign minister said that China does not want to see Russia lose the war. Otherwise, the US would redirect its entire attention to the Indo-Pacific.

On this front, Trump was supposed to meet Putin, but the meeting has been denied by Russia first and then by Trump, who said it didnot make sense to meet with Putin if a draft deal has not been agreed to in advance. At the same time, Putin has just unveiled his newest weapon, the nuclear-propelled Burevestnik, which is also called the SSC-X-9 Skyfall (named for the storm petrel, a bird that some believe foreshadows a storm). The missile is supposed to be very difficult for enemy radars to intercept, and could hit any point onthe planet. This shows how all geopolitical conflicts currently in place are all connected.