In a high-stakes summit held in Busan, South Korea, Presidents Xi Jinping and Donald Trump met face-to-face for the first time in six years, aiming to de-escalate mounting tensions between the world’s two largest economies. The 100-minute meeting yielded a series of time-bound agreements that signalled a pause in their intensifying trade conflict, which in turn is part of a much larger geopolitical confrontation that we have called Cold War 2.
Key outcomes of the meeting included advancements on three important fronts. First, China committed to resuming large-scale purchases of US soybeans, offering relief to American farmers, even if the commitment is lower than what China used to buy before the trade war began. Second, China pledged to curb the export of precursor chemicals used in fentanyl production, addressing a major USpublic health concern, which is particularly devastating for the West Coast of the country, where many cities have been “zombified.” Third, the two leaders agreed to suspend new export controls on rare earth elements for one year, a move that could stabilize global supply chains critical to electronics and defense industries.
In return, Trump announced a reduction in tariffs on Chinese goods from 57% to 47%, scrapping the threatened 100% hike from November 1st, which had been announced after China decided to increase export controls of its rare earths. Plans were also announced for reciprocal state visits in 2026, hinting at a longer-term diplomatic thaw.
While no comprehensive deal was signed, both sides expressed optimism. Trump rated the meeting a “12 out of 10,” and Xi emphasized the importance of continued cooperation. Though fragile, the summit marked a symbolic reset in US-China relations, offering a reprieve from escalating economic hostilities and a much needed respite for financial markets.
Is all that glitters gold, in this instance? Xi after all was the clear winner of this round, recognised as such by almost all independent observers. Notably absent from the agenda was Taiwan, suggesting a tacit understanding to deprioritize the contentious issue, which will lose less and less relevance in the American agenda as time progresses. Trump meanwhile said in a post on Truth Social that “My G2 meeting with President Xi of China was a great one for both of our countries. This meeting will lead to everlasting peace and success. God bless both China and the USA!”. By calling the meeting a G2, Trump implicitly brought China to the same level as the US, making it a peer instead of a challenger to the US’ incumbent power (to use the terminology of Graham Allison in his bestselling book “Destined For War”).
Third, by recognising a G2 format, Trump de-facto accepts that the world will be divided into spheres of influence, and China’s sphere will encompass Taiwan. This will be discussed in greater detail in an upcoming piece of research on the US retrenchment. Finally, last week’s meeting seems yet another step towards the completion of an American Yalta 2.0 agreement with China and Russia, which we have discussed since last summer. Xi may not want Russia placed at the same level as the US and China itself, but this may be a necessary step to lead to a broader geopolitical equilibrium in Europe (i.e. Ukraine), North Africa and the Middle East.
