Trump and Xi Forge Tariff Deal, Declare Trade Dispute Settled at APEC Summit

US President Donald Trump and Chinese leader Xi Jinping met in South Korea today, announcing a significant breakthrough in their long-standing trade dispute. According to reports from vertexaisearch.cloud.google.com, President Trump confirmed an agreement to reduce fentanyl-related tariffs on China to 10% following their discussions. This pivotal meeting occurred on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Busan.

President Trump declared the trade dispute between the two economic powerhouses "settled," a statement that immediately garnered global attention. This development, reported by The Hindu, marks a potential de-escalation after years of escalating tariffs and economic tensions.

The core of the agreement involves a reduction in tariffs specifically targeting fentanyl-related products originating from China. This move aims to address the ongoing fentanyl crisis in the United States while fostering improved bilateral relations, as noted by The Times of India.

The meeting, the first in-person encounter between the two leaders since Trump's return to the White House, took place in Busan, South Korea. Al Jazeera highlighted that the discussions were highly anticipated, with global markets closely watching for any signs of a truce.

Global financial markets reacted positively to the news, reflecting optimism about a more stable trade environment. This sentiment underscores the significant impact that US-China economic relations have on worldwide stability and prosperity, according to analysis from Al Jazeera.

Chinese state-run Xinhua News Agency reported that President Xi Jinping emphasized the need for China and the United States to be "partners and friends." He also noted that economic and trade negotiation teams had reached a basic agreement in Kuala Lumpur prior to this summit, setting the stage for today's talks.

• The US-China trade war, initiated in January 2018 by then-President Donald Trump, involved imposing tariffs on Chinese goods to address what the U.S. deemed unfair trade practices and intellectual property theft, as detailed by Wikipedia. This conflict escalated significantly in 2025 under the second Trump administration, with the U.S. imposing tariffs as high as 145% on Chinese goods and China retaliating with 125% tariffs on American products.
• The fentanyl crisis has been a critical point of contention and potential cooperation between the two nations. ncuscr reported that Chinese entities play a significant role in the fentanyl supply chain, from precursor chemicals to money laundering. While China implemented a class-wide scheduling of fentanyl substances in 2019, cooperation was temporarily suspended in 2022 following then-House Speaker Nancy Pelosi's visit to Taiwan, according to The Guardian.
• Previous attempts at de-escalation included a "phase one" trade deal signed in January 2020, where China committed to purchasing $200 billion in additional U.S. goods. However, China fell short of these targets due to factors like the COVID-19 pandemic, as noted by China Briefing News. The Council on Foreign Relations also highlighted that the Biden administration largely maintained Trump's tariffs, indicating the persistent nature of the trade tensions.
• The APEC summit in South Korea served as the crucial backdrop for these high-level discussions. The Diplomat reported that the much-anticipated Trump-Xi summit overshadowed other events, offering a chance for a "fragile truce" rather than a grand bargain. This meeting marked the first face-to-face interaction between the two leaders in six years and four months, according to Xinhua News Agency.
• The economic implications of this agreement are substantial, potentially stabilizing global markets that have been rattled by trade uncertainties. Al Jazeera emphasized that a full-blown trade war between the world's two largest economies would severely impact global economic growth, making any de-escalation a positive sign for international stability.
• The agreement on fentanyl tariffs specifically addresses a major public health and security issue in the United States. pbs reported that the U.S. has consistently urged China to curb the export of chemicals used to produce fentanyl, which is then often trafficked into the U.S. via Mexico. This cooperation is seen as a vital step in saving lives and combating drug trafficking.
• Despite the declared settlement, underlying structural issues in the US-China economic relationship persist, including disagreements over intellectual property protection, state enterprise subsidies, and technology transfer requirements, as outlined by a 2025 supply chain implications report. The framework agreement reached in Kuala Lumpur prior to the APEC meeting was described as a "basic agreement" to resolve major concerns, suggesting ongoing work will be needed to solidify long-term stability.