What to expect from US-China trade talks on Thursday

Upcoming talks between President Donald Trump and Chinese President Xi Jinping could defuse several key economic points in the trade war between the two countries.

The leaders of the world’s two largest economies are expected to meet Thursday in South Korea to negotiate several disputed issues that have threatened both countries in recent months. Treasury Secretary Scott Besent said in television interviews last weekend, following meetings with his Chinese counterpart, that leaders would work out the details of an agreement on tariffs, soybeans, rare earth metals and fentanyl.

The great powers are at loggerheads

“I think we have the framework that allows the two leaders to have a very productive meeting for both sides,” Besant said in a meeting with the press on Sunday. “And I think it would be a great thing for American citizens, for American farmers, and for our country in general.”

If the negotiations go as Besant indicated, they will alleviate many economic threats Which emerged in recent months when the United States and China imposed reciprocal trade measures against each other. Stocks rose Monday on optimism that the latest trade wars will ease.

Trade tensions escalated seriously earlier this month after Chinese officials said they would restrict exports of rare earth minerals, which are used by high-tech industries around the world, including the United States. Minerals are essential for making batteries, computer chips, and weapons, among other products. Trump responded by threatening to impose triple-digit tariffs on China, on top of already high import taxes, which could drive up costs for American consumers and cause shortages of consumer products.

Case subject: Rare earth elements, soybeans, and fentanyl

Additional tariffs are now likely to be “off the table,” Besant said on Face The Nation. He also said he expected China to issue “some sort of reprieve” on rare earth export controls.

In another sign of progress, Scott said China will likely resume purchasing soybeans from the United States, which could bring back a No. 1 customer for American soy farmers after China halted all purchases earlier this year. China may also take action to curb fentanyl smuggling into the United States, which could pave the way for Trump to remove the 20% tariff he imposed to stem the flow of illicit drugs.

Overall, the talks could help calm the intermittent US-China trade war that has erupted this year as Trump sought to reshape US trade policy. However, some experts said the talks were unlikely to resolve the fundamental differences driving the conflict, including the US trade deficit with China that Trump has often criticized, and US dependence on rare earths from China, which dominates the market for critical materials.

“Negotiations this fall will likely produce a fragile agreement,” Dan Alamario, chief geopolitical strategist at Alpine Macro, wrote in a commentary last week. “The recurring cycle of tension, truce and tension will continue as both powers are likely to push against each other, but remain too economically intertwined to risk complete separation.”