China-U.S. Trade Talks Secure Fragile Truce Amid Looming Tariff Deadline

Chinese and U.S. trade officials concluded economic and trade consultations in Kuala Lumpur on October 26, announcing a preliminary consensus to prudently address key issues, including tariffs, export controls, and fentanyl regulations, according to Chinese Vice Premier He Lifeng and top negotiator Li Chenggang. The talks, held on the sidelines of the ASEAN summit, aim to stabilize relations amid a deepening trade war fueled by Trump-era tariffs and Beijing's rare-earth export curbs, a Xinhua report said.

The discussions followed months of escalating tensions, including U.S. tariffs surging to 155% on Chinese goods and China's retaliatory restrictions on critical minerals, according to a MarketMinute analysis. Li Chenggang, who recently replaced his World Trade Organization role to focus on bilateral negotiations, was reported in a LiveMint report to have emphasized that both sides demonstrated "mutual respect" during the sessions, though the U.S. position was described as "tough." He added that the outcomes will now be reviewed domestically before a planned Trump-Xi summit, according to the Business Times.

The consultations come as the 90-day tariff truce—established after a September 19 phone call between President Trump and President Xi Jinping—nears expiration on November 10, China Daily reported. Analysts warn that a breakdown in the truce could reignite volatility in global markets, which have already seen sharp swings due to earlier tariff hikes. The U.S. Treasury and Commerce departments reportedly sought assurances from China on easing rare-earth export controls, while Beijing pushed for reduced tariffs and cooperation on fentanyl regulations, according to a Reuters dispatch.

Despite the tense backdrop, U.S. business leaders remain cautiously optimistic about China's 15th Five-Year Plan (2026–2030), which emphasizes high-quality development and modernized industrial systems, as noted in a Bastille Post report. Dan Shamdasani of Public Clothing Company praised China's "unmatched infrastructure" for rapid production, while Shant Mouradian of Box City highlighted the cost advantages of sourcing from China. Ferish Patel of Cooley LLP noted growing opportunities in tech and life sciences, framing China's transition from "Made in China" to "Innovated in China" as a strategic shift, the Bastille Post piece added.

The talks also addressed broader geopolitical risks, including U.S. export restrictions on advanced semiconductors and China's export controls on gallium and germanium, critical for U.S. defense and tech sectors. Analysts have warned about the market implications of these moves. Li Chenggang stressed that China's export policies "do not prohibit exports" and applications meeting regulations are approved, according to the Global Times. Meanwhile, U.S. Treasury Secretary Scott Bessent—who had previously criticized Li in public—has shifted toward de-escalation ahead of the Trump-Xi summit, observers reported.

Experts caution that trust remains fragile. Wang Wen of Renmin University noted that Washington's inconsistent policies—such as reneging on prior commitments—undermine progress, a point highlighted in China Daily's coverage. However, both nations appear committed to avoiding a full-scale trade war, with Li stating that a stable economic relationship benefits "both countries and the rest of the world," the Business Times reported.

The preliminary consensus now requires domestic approval in both countries. With Trump's November 1 tariff deadline looming, analysts expect further volatility in commodity markets and supply chains, observers have warned. The outcome of the Trump-Xi summit in late October will be pivotal, as will the U.S. response to China's stance on rare-earth materials, China Daily noted.

For now, the Kuala Lumpur talks offer a tentative reprieve, but the path to a durable resolution remains fraught with challenges.

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