Negotiations between Trump and Xi: A Step Toward Agreement or Escalation of Confrontation?

President Trump’s Asian tour and his meeting with Xi in South Korea were more than just a diplomatic event; they became an arena for showcasing the serious face of great power competition—a contest that has moved beyond tariffs and economic statements and into a battle over the shape of the future global order.

According to Rokna, only a few weeks ago relations between the world’s two largest economies were on the verge of explosion. Washington threatened tariffs of up to 130 % on Chinese goods, and Beijing responded by significantly limiting exports of rare-earth elements. This volley of action and counter-action no longer fits the classic “trade war” mold. What is now underway is a redefinition of the relationship between economic interdependence and national security; where financial ties and global supply chains are no longer seen as guarantors of stability but, in the eyes of both powers, as potential threats to survival and influence.

A Fragile Cease-fire in the Economic War: Washington and Beijing Seek to Curb Crisis before It Explodes

Despite the unprecedented severity of U.S.–China rivalry, both sides have come to a mutual understanding that sustained unmanaged tension could lead to unpredictable political and economic costs. While markets fret over global supply-chain collapse, behind closed doors diplomats are working to prevent the shift from competition to full-blown crisis.

In intense negotiations in Malaysia—with senior U.S. and Chinese representatives such as Scott Bessent and He Lifeng—progress was made, albeit fragile. The outcome was a preliminary agreement to establish a temporary economic truce that, although still standing on shaky ground, for now prevents escalation of the confrontation.

Under this truce, Beijing agreed to delay implementation of export restrictions on rare-earth elements—crucial for U.S. advanced industries and defense—with the understanding Washington would hold off on new technology export sanctions. Meanwhile, Washington signalled flexibility by postponing certain high-tech export restrictions, and China committed to resume purchasing U.S. agricultural products; indicators of a temporary compromise both capitals are seeking to present as a victory. Trump, in Seoul, celebrated the package of measures as his own “personal achievement”—a list ranging from the lifting of TikTok restrictions and increased U.S. soybean sales to tariff relief and supply-chain management.

The Strategy of Instability: How Trump Uses Ambiguity as a Geopolitical Weapon

Behind the veneer of victory lies deep doubt: nearly all analysts agree that what has emerged between the two powers is not a lasting agreement, but a tactical cease-fire—a pause within a competition rooted in global power structures. The fragility of this situation stems not only from the nature of the agreements but from the human factor: Donald Trump, a president whose unpredictability is both a threat and a tool for foreign partners.

Trump has shown repeatedly that he is prepared to abruptly cancel negotiations even with his closest allies, shifting course 180 degrees at critical moments. So much so that among some political observers a new term has formed: “Taco” (Trump Always Cuts Out). This phrase has become a political code — a symbol of a leadership whose every decision can alter the trajectory of global negotiations in an instant.

This instability in Trump’s policy is not accidental; it has become a pressure technique: an approach that intentionally leaves no space for certainty for adversaries and even allies of the U.S. In Asia, many observers believe Truman’s White House deliberately keeps a level of ambiguity and constant tension to keep rivals and even American partners in a reactive posture. This policy of instability is not confined to diplomacy. It is now reshaping global supply-chain architecture. Washington is swiftly implementing a two-tier strategy to reduce its dependency on China in critical raw materials and sensitive technologies.

At a strategic level, Washington is enforcing strict controls on high-end chip exports to China, while simultaneously diversifying supply of rare-earth elements by striking new mining and processing agreements with countries such as Malaysia and even Saudi Arabia. Alongside Japan, it is crafting a framework for strategic stockpiling of critical minerals. The message is clear: Washington aims to form a friendly “OPEC of critical minerals”—a bloc of allied nations capable of resisting China’s supply-chain coercion. But this ambitious effort also contains an implicit admission: the advanced U.S. economy, from smart-weapon production to electric-vehicle manufacturing, remains heavily reliant on China in the short term. And in a global landscape where supply chains themselves are weapons, even the greatest powers cannot escape dependency.

A World in the Grey Zone of Power; Between Trump’s Peace Talk and China’s Structural Threat

On the other side of this confrontation, China has turned America’s vulnerability into leverage. Beijing not only dominates rare-earth extraction but also holds near-monopoly power in processing these elements. In a world where defense industries and advanced technologies depend on these materials, China is acutely aware that no sustainable alternative exists.

In addition to this natural leverage, China is investing billions in its semiconductor industry to pursue technological self-sufficiency. Its message is clear: if the U.S. closes the chip gate, we will lock the gate on critical raw materials. This logic of reciprocity transforms what might seem like a temporary pause in export controls into a profoundly political decision—one that Xi Jinping can present domestically as a strategic victory.

But the U.S.–China competition no longer resides solely in the economic realm; it has decisively entered the geopolitical arena. Trump seeks to use China’s influence on Ukraine to his advantage, hoping Xi Jinping can pressure Vladimir Putin to withdraw or at least de-escalate the conflict. In return, China expects the U.S. to soften its stance on Taiwan, and to reduce military and political provocations. Here lies the core of the crisis: neither side is willing to concede on fundamental strategic issues.

China views Taiwan not as a diplomatic question but as a sovereign and inseparable component of its national security. Chinese authorities have repeatedly warned that they will not rule out the use of force to bring the island into Beijing’s control—a clear line of red drawn against any foreign support for Taipei. On the U.S. side, Washington is compelled to reassure Taiwan and its Asian allies that its deterrence posture remains intact and unwavering.

Yet here lies a fundamental contradiction: Donald Trump publicly touts his personal rapport with Xi Jinping as a political asset—a sign of his crisis-management prowess—while his national-security team must transmit a different message: that the U.S. will unwaveringly defend Taiwan and restrain China.

This duality between Trump’s rhetoric of peace and China’s structural threat is felt not just in Asia but across the Western alliance. Europe, Canada and several Southern-hemisphere powers are fatigued by the “America First” policy and the unpredictable shifts of the White House. They are now seeking strategic autonomy more than ever. In Asia, as well, longtime U.S. allies receive mixed signals: Washington calls on them to stay in the coalition to contain China, yet it also offers tactical concessions in areas such as technology or trade. In this world, a power vacuum is slowly emerging—a grey zone between competition and cooperation, where international rules weaken and the future of global order remains shrouded in uncertainty.

Meeting of Trump and Xi Under Strategic Doubts

In a world oscillating between polarization and disorder, China is playing the long game. Beijing is striving to present itself not as a threat but as a pillar of “responsible stability”—a power aligned with free trade, multilateralism and a multipolar future, one where no country monopolizes decision-making. By contrast, Donald Trump—reducing green subsidies and emphasizing “domestic manufacturing at any cost”—has unintentionally opened competitive space for China in emerging markets. As Washington relies more on protectionist policies, China is quietly but steadily cementing its position in developing economies.

On a tactical level, Donald Trump may claim his meeting with Xi Jinping in Seoul as an immediate success. China’s return to U.S. soybean purchases may appease American farmers; the pause in rare-earth export controls may soothe global tech markets; a symbolic easing of TikTok restrictions may signal a shift in U.S. policy toward Chinese firms; and ultimately, Trump can argue that without igniting full-scale war, he forced China into concessions.

But beneath these tactical wins lies a darker strategic picture. China retains its dominant position in critical-minerals supply chains—a threat to U.S. defense and technology industries. Meanwhile, Washington must manage networks of allies who increasingly doubt the durability and predictability of U.S. commitments.