Fragile Busan Truce Eases Trade Pressures, Geopolitical Tensions Unresolved

President Donald Trump and Chinese President Xi Jinping have struck a landmark trade agreement in Busan, South Korea, marking a pivotal shift in U.S.-China relations amid escalating global economic tensions. Dubbed the "Busan Truce," the deal includes tariff reductions, agricultural commitments, and a temporary suspension of rare-earth export controls, signaling a cautious reset in a relationship that has long defined global commerce, according to an STL News report. The agreement, announced on October 30, 2025, follows months of diplomatic maneuvering and comes as both nations seek stability ahead of a planned 2026 round of negotiations on technology and digital regulation, the STL News report said.

Key to the accord is a 10-percentage-point reduction in U.S. tariffs on Chinese imports, including consumer electronics and machinery, bringing the total combined rate down to 47% from 57%, according to a Tribune India report. In exchange, China has agreed to pause retaliatory tariffs on U.S. goods and lift rare-earth export restrictions for at least one year—a critical concession for American tech and defense sectors reliant on these materials. The U.S. will also extend limited tariff relief on industrial chemicals, while China has pledged to enhance enforcement against fentanyl precursor exports, a priority for Trump's administration.

Agricultural cooperation forms another cornerstone of the deal. China has committed to resuming large-scale purchases of U.S. soybeans, corn, pork, and wheat, offering a lifeline to American farmers who have struggled with disrupted exports since the 2018 trade war, the STL News report said. The move is expected to inject $15–25 billion into rural economies and bolster Trump's trade agenda ahead of the 2026 midterms, the STL News report added.

While the agreement avoids sweeping reforms, it addresses immediate economic pressures for both sides. For the U.S., lower tariffs and stable agricultural exports could reduce inflationary pressures and stabilize global supply chains. China, meanwhile, gains breathing room to manage its slowing economy and diversify energy imports, as the deal includes expanded U.S. liquefied natural gas (LNG) sales, the STL News report noted.

However, the truce remains fragile. Past agreements, such as the 2020 Phase One pact, have faltered due to noncompliance and geopolitical tensions. Analysts highlight risks including China's enforcement of fentanyl controls, actual follow-through on agricultural purchases, and unresolved disputes over advanced semiconductors and AI chips, according to a New York Times report. The New York Times piece also reported that Nvidia CEO Jensen Huang expressed uncertainty about whether the meeting advanced plans to resume selling advanced chips in China, a move that remains central to U.S. national security concerns.

Politically, the deal serves both leaders well. For Trump, it reinforces his image as a tough yet pragmatic negotiator, while Xi secures economic relief amid domestic pressures. The choice of Busan—a neutral venue—underscores efforts to depoliticize the relationship, though broader geopolitical issues, including Taiwan and South China Sea tensions, remain unresolved, the STL News report observed.

The Busan Truce has already spurred market optimism, with global equities rising and commodity prices stabilizing. Yet, as Trump acknowledged, "we do not have too many major stumbling blocks"—a sentiment that may test the durability of this fragile détente as 2026 approaches, a Tribune India report noted.