America’s and China’s top trade representatives met for emergency talks in Malaysia on Saturday, attempting to prevent their trade war from getting worse again. The Kuala Lumpur talk happened just days before US President Donald Trump and Chinese President Xi Jinping meeting next week in South Korea. Both sides want to ensure that sitting down has a good chance to occur.
The negotiations were conducted on the margins of a large Southeast Asian countries summit. US Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent met with Chinese Vice Premier He Lifeng at the Merdeka 118 tower, the second tallest building in the world. They are racing against the clock since Trump threatened to impose new 100% tariffs on Chinese goods from November 1. That’s his retaliation after China blocked exports of rare earth materials and minerals to US consumers.
Trade Deal Coming Apart Quickly
Things were better a few months ago. The Chinese and American teams sat together four times since May and struck a deal which reduced tariffs. US tariffs reduced to around 55% and Chinese tariffs to 30%. The two countries agreed to continue talking and the deal was supposed to last until November 10.
But it all went awry in late September. America placed thousands more Chinese firms on a blacklist that prevented them from purchasing American goods. China retaliated with force on October 10 by placing tough new restrictions on the export of rare earths globally. The materials are used in phones, computers and hardware for the military, and China dominates the supply of most of the world’s material.
American officials labeled China’s action a power grab and declared that they will not accept it. Trump later announced on Friday that he’s investigating whether China violated commitments from a 2020 trade deal. That probe would allow him to impose additional tariffs on top of what already exists.
What Happens Next Week Matters
Trump said prior to the beginning of the Malaysia negotiations that he would like to talk about American farmers when he meets with Xi. He also intends to raise Taiwan topic and inquire about releasing Jimmy Lai, a Hong Kong newspaper publisher who is in prison. Trump said he believes the meeting will be successful and the two leaders have much to discuss.
Analysts tracking the situation have said that the Malaysia summit must come to some middle ground prior to Trump and Xi meeting. If the leaders are unable to come to an agreement next week, the trade war may become a lot uglier for all concerned.
News At Glance
- US and China officials met Saturday in Malaysia in an attempt to avoid trade war from escalating
- Trump threatened Chinese goods with 100% tariffs beginning November 1 due to rare earth restrictions
- Earlier trade agreement in May reduced tariffs but collapsed in September
- China cut off rare earth exports after US restricted thousands of Chinese companies from purchasing American goods
- Trump, Xi summit next Thursday in South Korea may decide whether situation gets better or blows up
FAQs
Q: Why are US and China officials meeting in Malaysia?
They’re hoping to prevent the trade war from escalating before Trump and Xi sit down next week in South Korea.
Q: What are rare earths and why do they matter?
Rare earth materials are used in phones, computers and military equipment. China dominates the supply in the world and just cut off America.
Q: What tariffs are countries facing now?
US tariffs on Chinese products are approximately 55% and Chinese tariffs on US products are approximately 30%, but Trump would like to set them at 100%.
Q: When will Trump and Xi meet?
The two presidents will next Thursday meet at a summit in South Korea to address the trade issues.
Q: What will Trump talk with Xi?
Trump indicates he’ll speak on American farmers, Taiwan, and request China to release detained Hong Kong newspaper publisher Jimmy Lai.
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