U.S. President Donald Trump and Chinese President Xi Jinping at their pivotal meeting on October 30 in Busan, South Korea. They had come to address the escalating trade war between their countries. The summit held in Gyeongju resulted in a new peace agreement. This deal would reshape the economic playing field for the whole world’s two largest economies.
Both leaders understood that there was a need for quick action to lower rising tensions, all while facing a unique period of economic upheaval. Analysts call the current state a tenuous peace. They point out that while the immediate danger of heightened trade warfare may have receded, deeper issues have yet to be addressed. The summit provided an opportunity for both leaders to engage in dialogue and explore pathways to stabilize their economic relationship.
During the two-hour meeting, Trump and Xi addressed the high tariffs and other trade war actions that have soured relations in recent years. The outcome of their discussions led to a partial rollback of certain tariffs and threats that have characterized the trade war. Supporters of this move, including ourselves, view it as an important step toward encouraging cooperation, holding states accountable, and reducing the potential for further escalation.
The geopolitical landscape remains precarious. Many like to describe this showdown as a game of geopolitical chicken. Both countries are prudently surfing a tricky wave of great power rivalry to defend their national interests and avoid a self-destructive clash of titans. Regardless of the outcome, the summit will demonstrate both leaders’ willingness to meet and cooperate with one another. Yet the tenuous nature of this truce only underscores why negotiations matter going forward.
The agenda of the meeting is not limited to economic issues. As we’ve discussed before, it underscores just how important U.S.-China collaboration is for addressing global challenges. Needless to say, as the world’s two largest economies, what they do makes a big difference. These decisions affect more than their own countries, but all of us in the global economy.