Donald Trump and Xi Jinping meet in the South Korean port city of Busan on Thursday amid signs of progress on a number of key issues in the trade dispute between the United States and China, the world’s biggest economies.
Shortly after he arrived in South Korea on Wednesday, the US president told business leaders attending the Asia Pacific Economic Co-operation (Apec) meeting he expected to reach an agreement with the Chinese leader.
“I think we’re going to have a deal. I think it’ll be a good deal for both and that’s really a great result,” Mr Trump said.
He announced a trade agreement with Seoul following a meeting on Wednesday with South Korean president Lee Jae-myung.
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The deal will cut US tariffs on South Korean goods to 15 per cent in return for a $350 billion (€300 billion) investment package.
Seoul has agreed to invest $150 billion in shipbuilding in the US, and a further $200 billion in cash, paid in $20 billion instalments. The deal will see US tariffs on South Korean cars cut to 15 per cent, the same rate that applies to Japanese cars.
The Apec summit brings together the leaders of 21 countries which account between them for 60 per cent of the world’s gross domestic product (GDP).
The US president and his Chinese counterpart will be meeting for the first time since Mr Trump returned to the White House in January and triggered a trade war by imposing tariffs on China that reached 145 per cent earlier this year.
Negotiations brought a temporary reduction in the tariff to about 55 per cent on most Chinese goods, including a 20 per cent levy imposed because Washington alleged Beijing was not doing enough to stop the export of chemicals used to make the drug fentanyl.
Mr Trump suggested on Wednesday that the fentanyl levy could be reduced following actions by the Chinese authorities.
“I expect to be lowering that because I believe they’re going to help us with the fentanyl situation,” he told reporters on Air Force One as he flew into South Korea.
China this week bought three cargoes of American soybeans, their first purchase this year. Last year, China bought half of the soybeans produced in the US but it purchased none this year until now, buying more from Brazil and Argentina instead.
Beijing is expected to suspend for a year the implementation of sweeping new export controls on rare earth minerals used to manufacture everything from cars to laptops and smartphones.
The new measures would require export licences for goods containing even a trace of the rare earths, over which China has a near-monopoly as it refines 90 per cent of the world’s supply.
During his tour of Asia this week, Mr Trump reached critical minerals deals with Malaysia, Thailand and Japan in an effort to become less reliant on China. A week earlier, Australia agreed to build a refinery in the west of the country that would refine 100 tonnes of the rare earth gallium every year.
All of these projects will take a number of years to enter full production, during which time Beijing will be able to control supply of the minerals. Washington restricts exports to Beijing of some advanced technology, including high-end semiconductors, but Mr Trump hinted at an easing of these measures before Thursday’s meeting.
Both sides have indicated that Mr Xi and Mr Trump will address the US-China relationship more broadly and will discuss other geopolitical issues, probably including Russia’s war in Ukraine.
But on Wednesday Mr Trump played down the prospect of a substantive discussion of Taiwan, the independent country that China claims as its territory.
“I don’t know that we’ll even speak about Taiwan,” he said. “I’m not sure – he may want to ask about it. There’s not that much to ask about Taiwan.”
