Top economic officials from the United States and China are set to meet in Kuala Lumpur on Saturday in a last-ditch effort to prevent an escalation of their ongoing trade war and secure a long-awaited meeting between US President Donald Trump and Chinese President Xi Jinping next week.
The discussions, taking place on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit, aim to find a diplomatic path forward after President Trump threatened to impose new 100 percent tariffs on Chinese goods starting 1 November. The move, intended as retaliation for Beijing’s tightened export controls on rare earth magnets and minerals, could reignite a global trade confrontation, Reuters reports.
Over recent months, the fragile truce painstakingly brokered by US Treasury Secretary Scott Bessent, US Trade Representative Jamieson Greer, and Chinese Vice Premier He Lifeng has been shaken. The agreement, reached through four rounds of talks since May, is now under severe strain following expanded US export restrictions and Beijing’s retaliatory measures.
Saturday’s meeting is designed to pave the way for a high-level encounter between Trump and Xi at next Thursday’s Asia-Pacific Economic Cooperation (APEC) summit in South Korea. That meeting could centre on temporary relief on tariffs, easing of technology export bans, and China’s potential resumption of large-scale purchases of American soybeans.
According to Josh Lipsky, Chair of International Economics at the Atlantic Council in Washington: “The meeting cannot proceed without an agreement to return to the ceasefire we had over the summer. The US wants China to reverse and end its new rare earth controls.”
However, Lipsky warned that Beijing is unlikely to concede easily, as rare earth export restrictions remain China’s key leverage in the trade negotiations.
Details about the Kuala Lumpur meeting have been kept tightly under wraps by both governments. Even the venue was only confirmed when Chinese officials arrived at Merdeka 118 Tower, the world’s second-tallest building. President Trump is expected to arrive in the Malaysian capital on Sunday and may comment on the talks’ progress.
Scott Kennedy, a China economic analyst at the Centre for Strategic and International Studies (CSIS), observed: “We won’t know whether Beijing’s countermeasures have successfully balanced Washington’s export controls or fuelled another escalation until Trump and Xi meet. If a deal is struck, their gamble pays off. If not, things could turn far uglier.”
The world’s two largest economies are now striving to avoid another spiral into triple-digit tariffs, last seen in April when the United States imposed sweeping duties on global imports. In response, China suspended the supply of rare earths — crucial materials for technology and defence — to American buyers.
In May, the first meeting between Bessent, Greer, and He in Geneva produced a 90-day ceasefire, lowering tariffs to 55% on US goods and 30% on Chinese goods, while restoring magnet supplies. The truce, later extended through talks in London and Stockholm, was due to expire on 10 November.
But by late September, the US Commerce Department broadened its export blacklist to include any company over 50% owned by already-restricted firms, effectively barring exports to thousands more Chinese entities.
Beijing retaliated on 10 October by introducing new global rare earth export restrictions, ostensibly to prevent military use of these materials. Under the new rule, any export involving Chinese rare earth extraction or refining technology requires a government licence.
Bessent and Greer denounced the Chinese policy as a “global supply chain power grab”, while Reuters sources indicate the Trump administration is now considering new restrictions on a range of software-powered products, including laptops and aircraft engines.
Further fuelling the dispute, Washington on Friday launched a new tariff investigation into China’s alleged failure to honour the 2020 “Phase One” trade agreement. That deal had paused the original US–China trade war, with Beijing pledging to significantly boost purchases of American agricultural, manufactured, and energy products, targets which were never met.
The fresh probe could give President Trump additional legal grounds to raise tariffs on Chinese imports. It may also lead Washington to press Beijing to resume buying American soybeans, following a total halt in September — a move that has hit US farmers particularly hard, a group considered vital to Trump’s political base.