Trade Truce Averts Escalation but U.S.-China Tech War Unresolved

Leaders of the Asia-Pacific Economic Cooperation (APEC) forum in Gyeongju, South Korea, concluded their summit amid cautious optimism after U.S. President Donald Trump and Chinese President Xi Jinping announced a temporary trade truce. The agreement, dubbed the "Busan Truce," marks a significant de-escalation in the long-simmering U.S.-China trade war, with both sides pledging to reduce tariffs and stabilize supply chains, according to an STL News report. The deal, finalized during Trump's brief stop in South Korea en route to a broader Asia tour, includes immediate tariff cuts on Chinese goods, a suspension of rare-earth export controls by Beijing, and renewed U.S. agricultural exports to China, according to The Economic Times.

Xi Jinping, who seized center stage at the APEC summit after Trump's early departure, emphasized China's commitment to multilateralism and global free trade, according to Al Jazeera. "The more turbulent the times, the more we must work together," he declared, positioning China as a counterbalance to Trump's "America First" policies. Meanwhile, Trump highlighted the deal's potential to make America "great again" by resetting trade terms and bolstering domestic industries, as U.S. News reported. The U.S. reduced tariffs on Chinese imports by 10 percentage points, including fentanyl-related duties, while China agreed to suspend retaliatory tariffs and resume large-scale purchases of U.S. soybeans and energy products, according to Cryptopolitan.

The agreement, however, leaves unresolved tensions in technology and semiconductors. Nvidia CEO Jensen Huang, whose company remains barred from selling advanced AI chips in China, expressed uncertainty about whether the summit advanced his firm's return to the Chinese market, according to The New York Times. Trump confirmed that the U.S. will restrict China's access to Nvidia's Blackwell chips, reinforcing export controls on critical technologies, as reported by WallStreetPit. China, in turn, has suspended investigations into U.S. semiconductor firms and will issue general export licenses for rare earths and other strategic materials, The Economic Times reported.

Global markets reacted positively, with equities and commodity prices rising on hopes of stabilized trade flows, an STL News report noted. The deal also includes provisions to combat fentanyl trafficking, with China pledging stricter controls on precursor chemicals, Cryptopolitan reported. Yet analysts caution that the agreement's durability remains untested. Past U.S.-China trade pacts, such as the 2020 Phase One deal, have faltered due to noncompliance and geopolitical friction. North Korea's sharp rebuke of South Korea's denuclearization talks with China further underscores regional sensitivities, U.S. News reported.

For U.S. farmers, particularly in the Midwest, the agreement represents a lifeline after years of disrupted exports. China's commitment to purchase 12 million metric tons of soybeans this year and 25 million annually through 2028 could inject billions into rural economies, Cryptopolitan reported. Energy and manufacturing sectors also stand to benefit from lower input costs and relaxed rare-earth restrictions, though enforcement mechanisms remain opaque, an STL News report noted.

While the Busan Truce offers short-term relief, long-term challenges persist. Both nations face domestic pressures to maintain hardline stances on issues like Taiwan and intellectual property. A joint monitoring committee will oversee compliance, but its effectiveness remains uncertain, an STL News report noted. For now, the truce provides a fragile but necessary pause in a rivalry that has shaped global commerce for decades.