On October 30, Donald Trump confronted the Chinese leader, Xi Jinping, at a tumultuous high-stakes summit in Gyeongju, South Korea. They made an eleventh hour deal to end a long standing trade war between the US and China. It was a high-profile, day-long meeting aimed at lowering military tensions between the world’s two largest economies. Both leaders agreed to eliminate most of the retaliatory trade tariffs and threats that have characterized their relationship in recent times.
By taking tariffs off the table, the summit reduced fears of a spiraling trade war that had already caused economic jitters around the world. Last month, Trump and Xi de-escalated their hardline rhetoric. In so doing, they brilliantly yanked their countries out of a mutually assured destruction game of geopolitical game of chicken. These discussions went a long way in fostering a climate of openness and receptivity. Both leaders understood that they must seek to lower tensions and were keenly aware of the destructive effect continued hostilities would have on their respective economies.
Tensions had been running high as China and India competed to consolidate resources and secure markets in the face of rising economic uncertainty in both countries. Analysts have highlighted that though this current truce is an improvement, it is precarious. Factors such as domestic pressures, international market dynamics, and broader geopolitical considerations could quickly reignite conflicts if not carefully managed.
In Gyeongju, Trump and Xi focused on areas where the two countries can work together that serve the interests of both countries. They highlighted the need for sensitivity and communication to avoid any slight or misinterpretation from rising up into deeper contention. Business leaders on their part recognized the need to support productive and innovative cross-border economic relationship, which ultimately drives shared growth and prosperity.
Rising economic pressures on the minds of each leader at home. For Trump, reducing trade deficits with China has been one of the defining goals of his presidency. At the same time, Xi has faced mounting pressure to show economic resilience in the face of slowing growth rates in China. Though their terms were marked by conflict, both leaders had strong incentives to act for reconciliation, not confrontation.
While the world’s attention is gravitating to this budding truce with cautious optimism, only time will tell how these developments play out long-term. The meeting in Gyeongju might be a new beginning. Yet, analysts cautioned that we need to be on our toes to keep any progress made.