Trump seeks trade war truce with China's Xi in South Korea talks

By Trevor Hunnicutt

BUSAN, s dae-han-min-gook (Reuters) -U.S. Chairman Donald ruff and China's leader Xi Jinping were go under to hold talks in South Korea on Thursday morning, seeking a return to a fragile trade war truce between the world's two largest economies.

The meeting, the first between the leaders since Trump returned to office in January, is due to begin at 11 a.m. Local time (0200 GMT) in the southern port city of Busan, capping off the U.S. President's whirlwind trip around Asia.

Trump has repeatedly expressed optimism about reaching agreement with Xi during the summit, taking place on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit, buoyed by a breakthrough in trade talks with South Korea on Wednesday.

But with both countries increasingly willing to play hardball over areas of economic and geopolitical competition - which analysts see as a new Cold War - many questions remain about how long any trade detente may last.

The trade war reignited this month after Beijing proposed dramatically expanding curbs on exports of rare-earth minerals vital for high-tech applications, a sector China dominates.

Trump vowed to retaliate with additional 100% tariffs on Chinese exports, and with other steps including potential curbs on exports to China made with U.S. Software - moves that could have upended the global economy.

"THE G2 WILL BE CONVENING SHORTLY," Trump posted on Truth Social shortly before landing in Busan to meet Xi.

In a separate post, he said the U.S. Would step-up testing of nuclear weapons immediately, noting China's growing arsenal.

U.S. EXPECTS BEIJING TO DELAY RARE EARTH CONTROLS

After a weekend scramble between top trade negotiators, U.S. Treasury Secretary Scott Bessent said he expected Beijing to delay the rare earth controls for a year and revive purchases of U.S. Soybeans critical to American farmers, as part of a "substantial framework" to be agreed by the leaders. 

Ahead of the summit, China bought its first cargoes of U.S. Soybeans in several months, Reuters reported exclusively on Wednesday.

The White House has signaled it hopes the summit will be the first of several between Trump and Xi in the coming year, including possible leader visits to each country, indicating a protracted negotiation process.

But Trump wants some quick progress, in talks being closely watched by businesses worldwide.

Trump said on Wednesday he expects to reduce U.S. Tariffs on Chinese goods in exchange for Beijing's commitment to curb the flow of precursor chemicals to make fentanyl, a deadly synthetic opioid that is the leading cause of American overdose deaths.

Trump has also said he might sign a final deal with Xi on TikTok, the social media app that faces a U.S. Ban unless its Chinese owners divest its U.S. Operations.

Beijing is willing to work together for "positive results", foreign ministry spokesperson Guo Jiakun said on Wednesday.

PRIOR DEALS ON TARIFFS AND RARE EARTHS DUE TO EXPIRE

Previous deals, which brought down retaliatory tariffs sharply to about 55% on the U.S. Side and 10% on the Chinese side and restarted the flow of rare earth magnets from China, are due to expire on November 10.

Bessent said China had agreed to help curb the flow of fentanyl precursors, but did not say whether the U.S. Had made any concessions in return.

Beijing has sought the lifting of 20% tariffs over fentanyl, an easing of export controls on sensitive U.S. Technology, and a rollback of new U.S. Port fees on Chinese vessels aimed at combating China's global dominance in shipbuilding, ocean freight and logistics.

Trump's meeting with Xi comes at the end of a five-day trip to Asia in which he signed pacts with Japan and Southeast Asian nations on rare earths, seeking to blunt China's stranglehold on minerals used in everything from cars to fighter jets.

TENSIONS OVER TAIWAN

Regional strategic tensions, particularly over Beijing-claimed Taiwan, a U.S. Partner and high-tech powerhouse, are an ominous backdrop to the summit.

On Sunday, Chinese state media said Chinese H-6K bombers recently flew near Taiwan to practise "confrontation drills."

U.S. Secretary of State Marco Rubio said Taiwan should not be concerned about the U.S.-China talks, despite some experts expressing fears that Trump might offer concessions over the island. Washington is required under U.S. Law to provide Taiwan with the means to defend itself.

(Reporting by Trevor Hunnicutt in Busan, Michael Martina, David Brunnstrom, David Lawder and Daphne Psaledakis in Washington; Writing by John Geddie; Editing by Edmund Klamann and Lincoln Feast)

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