China-U.S. Trade Talks Test Fragile Truce Amid Rare Earth Tensions and Tariff Threats

China and the United States are set to resume high-stakes trade talks in Malaysia this week as both nations seek to avert a deepening economic confrontation and extend a temporary tariff truce set to expire on November 10, according to China Daily. Vice Premier He Lifeng will lead the Chinese delegation, while U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will represent Washington, according to The Business Times. The negotiations, the fifth since May, come amid escalating tensions over tariffs, export controls, and rare earth element management, with analysts warning that inconsistent U.S. policies threaten to unravel recent progress.

The talks follow a volatile year in U.S.-China economic relations, marked by alternating rounds of dialogue and retaliatory measures. Washington has imposed 100% tariffs on Chinese goods and extended export curbs on critical technologies, while Beijing has retaliated with rare earth export controls and port fees on U.S. ships, China Daily reported. Despite four rounds of discussions that stabilized bilateral ties and boosted market optimism, recent U.S. actions—including a Section 301 investigation into China's compliance with the 2019 Phase One trade agreement—have reignited fears of a trade war, according to a USTR press release.

Rare earth elements are a focal point. China, which dominates global production of these critical minerals used in electronics and defense systems, has reiterated it does not impose civilian export restrictions, China Daily reported. However, U.S. President Donald Trump has threatened "sky-high" tariffs in response to Beijing's tightened controls, as reported by Benzinga. Analysts like Xu Hongcai of the China Association of Policy Science argue that China's approach balances supply chain stability with national security, while U.S. demands for market access reflect broader strategic competition.

Businesses are already feeling the strain. Zhejiang Arcana Power Sports Tech Co., a fitness equipment exporter, reported a 22.6% year-on-year increase in U.S. exports through September, underscoring the importance of stable trade relations, China Daily reported. Geng Liangfeng, the company's vice-president, emphasized that "a sound China-U.S. economic relationship is the cornerstone for enterprises from both countries to grow together." Yet, companies face pricing uncertainty and compliance burdens as they navigate shifting export regulations, according to Mitkat Advisory.

The outcome of the Malaysia talks will also influence diplomatic prospects. Trump's planned meeting with Chinese President Xi Jinping at the APEC summit in South Korea hinges on de-escalation, with the U.S. leader having previously threatened to cancel the talks, as reported by Benzinga. The IMF's Thomas Helbling stressed the global stakes, noting that prolonged tensions could weigh on Asia's economy, which is "highly open and exposed to global trade," China Daily added.

While experts caution that trust remains fragile, both sides have signaled a preference for dialogue. Li Chenggang, a top Chinese negotiator, noted that "both China and the United States have engaged in constructive discussions and have come up with some proper solutions, reaching preliminary consensus," as reported by Benzinga. However, Wang Wen of Renmin University warned that "this approach erodes the very trust necessary for any lasting agreement," China Daily noted.